Ghana’s economic growth depends largely on investing in the agriculture value chain, the Institute of Statistical, Social and Economic Research (ISSER) has reiterated.
It has therefore called for more investments in the sector to help add value to the raw materials before exports.
This, it believes, would help create more jobs and rake in more revenue for the country.
ISSER said the world economy was undergoing significant challenges in 2022, while the economic and financial repercussions of the Russia-Ukraine war had added to the world’s post-pandemic economic recovery challenges.
Therefore, a structural change in the economy was key to Ghana building resilience against global shocks.
“Ghana still depends heavily on revenue from raw material exports. There is the need to modify structures to add value to primary products as a means to adapt to the increasingly volatile world economy.”
“Domestic initiatives should aim at increasing productivity and improving output in key primary sectors and value chains,” it said in its report on the Mid-year Review of the Budget Statement and Economic Policy for 2022, presented by the Minister of Finance, Ken Ofori-Atta, on July 25, 2022, to Parliament.
According to ISSER, proceeds from gold exports declined to US$5.08 billion from US$ 6.8 billion for 2020 and 2021 respectively.
The reduction, it said, was driven by lower export volumes despite higher prices in 2021 compared to 2020
The report also said, in the 2020/2021 crop year, the producer price of cocoa increased by 28 percent from GH¢8,240 per tonne to GH¢10,560 per tonne (GHS¢600/bag).
Again, the export of cocoa beans and products increased by nearly 23 percent between 2021 and 2020 respectively at US$2.84 billion and US$2.33 billion.
Separately, cocoa beans exported amounted to US$1.77 billion while that of cocoa products amounted to US$1.07 billion.
“Sub-Saharan African (SSA) countries face rising and persistent inflation, high debt, tightened borrowing conditions, high fuel prices, food insecurity, among others.”
“Given the current and projected economic situation, SSA countries including Ghana for complex choices -domestic policies to withstand the global shocks,” the report said.
Among key world economic challenges in 2022 according to the report increases in food prices by 84 percent (the largest increase since 2008), inflation (caused by rising food prices, rising agricultural, input prices, and supply chain challenges, among others).
In terms of global manufacturing, the report said, some of the challenges the sector faced included workforce shortages, high input costs, supply chain disruptions and high cost of borrowing.
It said the impact on Sub-Saharan African (SSA) economies specifically included rising commodity prices which had implications for the cost of living, and the ability to balance fiscal accounts, among others.
“Food makes up about 40 percent of consumer spending in SSA. About 85 percent of SSA wheat supply is imported, 33.4 million people in West Africa and the Sahel region could become food insecure, up from 27.3 million due to the high dependency on food imports by the regions.”
“Expected increases in poverty rates in countries with large vulnerable populations such as Nigeria, DRC and where dependence on food imports is high (Benin, Mozambique),” it said.
To address the food price volatility and its implication on food security, ISSER said it would require the holding of optimal buffer stocks.
“Current estimates by ISSER in terms of how much buffer of grains Ghana should hold per time is about 800,000 tonnes if the cost of maintaining these stocks is 10 percent of the value of grain,” it added.
The World Bank projects the outlook for commodity markets is heavily dependent on the duration of the Russia-Ukraine war and the severity of disruptions to supply chains
70 percent increase in fertiliser prices in 2022 due to increasing input costs (natural gas and coal prices), reduction in production and trade disruptions
Wheat prices are forecast to increase by over 40 percent in 2022 due to Ukraine being an important supplier.