With a 2015 GDP of $38.6 billion, Ghana is West Africa’s second-largest economy. While growth slowed in 2009 due to a slowdown in activity in the services sector, the economy quickly stabilized and is forecast to continue growing at 6 to 7% per year in the near future, driven in large part by the expansion of the oil sector. In addition, Ghana’s strong, stable democratic tradition, rule of law, and investor protections are unmatched in the sub-region. The World Bank’s “Doing Business” index ranks Ghana the best performer in West Africa by a significant margin. Ghana is in the lower-middle income group of nations worldwide.
Current Status of Ghana’s Agricultural Sector
Ghana’s agricultural sector has experienced slower growth than other critical sectors such as services. However, it remains a key driver of the Ghanaian economy, contributing 30% to GDP and just over 50% to national employment. The sector also offers a unique set of advantages to interested investors, including large plots of arable land, ecological zones that make the country suitable for the production of a diverse range of commodities, a strong enabling environment for investment, and established export channels to Europe and the United States.
Drivers of Growth in Ghana’s Commercial Food Market
Rapid urbanization and rising per-capita income in Ghana are driving significant increases in domestic demand for and consumption of staple crops. While the country is currently self-sufficient in most key staple crops, continued increases in consumption—along with shifts in consumer preferences toward rice and higher-value processed foods—will open a large gap between demand and current supply. This gap is currently expected to be filled through increased imports; however, the country has significant potential to scale up its agricultural production to not only feed its own people but also produce staple crops for export to neighbouring countries within the Sahel region.
Ghana’s strong economic growth has been accompanied by significant increases in FDI inflows into the country. From 2006 to 2016, FDI into Ghana increased at a compound annual growth rate of 41%, from $636 million to $2.527 billion. Ghana has been recognized as one of the most open economies for foreign equity investment in sub-Saharan Africa.
Trends in Production
Ghana is currently unable to meet its own growing and diversifying demand for food. While the country is self-sufficient in many key staple crops, excess demand in other critical crops—including rice, tomato, sugar, and poultry—have to be met by imports. In fact, Ghana currently produces not more than 30% of the raw materials needed by its agro-based industries. Similarly, local agro-processing capacity is also too small to meet increasing demand.
|Real GDP Growth (%)||14||9.3||7.3||4||3.9*|
|Non-Oil GDP Growth (%)||8.2||8.6||6.7||3.9||4.1|
|Nominal GDP (GH¢’ million)||59,816.00||75,315.00||93,416.00||113,343.00||139,936.00|
|Year-on-Year Inflation (%)|
|Monetary Aggregates Annual Growth Rates (%)|
|Money Supply (M2+)||33.2||24.3||19.1||36.8||26.1|
|Money Supply (M2)||30.2||22.9||18.2||33||26.6|
|Private Sector Credit||26.3||34.1||28.6||42.6||30.8|
|Interest Rate, End of Period (%)|
|Monetary Policy Rate||12.5||15||18||21||26|
|91-Da y Treasury Bill||10.3||22.9||18.8||25.8||23.1|
|182-Da y Treasury Bill||11.1||22.9||18.8||26.4||24.4|
|Exchange Rates (End-Period Transaction Rates)|
|External Sector (US$’ Million)|
|Exports of Goods and Services||14,595.50||16,812.00||16,206.00||15,257.80||10,438.10|
|Imports of Goods and Services||19,504.20||21,998.00||22,498.10||19,247.10||14,037.90|
|Current Account Balance||-3,541.30||-4,910.60||-5,704.10||3,694.50||-2,808.30|
|Overall Balance of Payments||712.5||-669.2||-874.2||-85.2||-105.8|
|Gross Foreign Assets (End-Period)||5,452.00||5,742.30||5,632.20||5,461.00||5,884.70|
|Months of Imports of Goods & Services||3.2||3.1||3.6||3.8||3.5|
|External Debts (US$’ Million)||7,653.00||9,153.60||11,901.90||13,871.80||15,781.80|
|Domestic Debt (GH¢’ Million)||11,841.10||18,535.20||26,665.80||34,650.80||38,828.10|
|Government (% of GDP)|
|Overall Balance (Incl. Grant & Divesti- ture)||-4||-11.5||-9.2||-10.2||-6.7|
|Domestic Primary Balance||2.9||-1.6||-0.5||3.2||3.9|
|Source: BoG, Ministry of Finance and GSS|