Growth in the agriculture sector has failed to mirror annual allocations of oil revenues to the sector, raising concerns over the ability of oil proceeds to lift the farming business from its dwindling fortunes.
A Graphic Business trend analysis between 2011 and 2015 showed that while allocations from the Annual Budget Funding Amount (ABFA) to the sector rose by 354.2 per cent, growth in the sector averaged 3.2 per cent within the five-year period.
Between 2011 and 2012, when ABFA allocations to the sector rose from GH¢13.1 million to GH¢72.5 million, growth in agriculture also rose from 0.8 per cent to 2.3 per cent.
Annual growth, however, took a nosedive from 2013, dropping from 5.7 per cent to 4.6 per cent in 2014 before easing further to 2.5 per cent last year. The declining growth was in spite of increased disbursements of ABFA to the sector.
Within the period, a total of GH¢329.4 million was disbursed to the sector. In 2011, the sector received GH¢13.1 million, 2012 allocation increased to GH¢72.5 million, and decreased to GH¢13.6 million in 2013. Allocations shot up to GH¢170.6 million in 2014 and then decreased to GH¢59.5 million in 2015.
Percentage share of GDP
In terms of contribution to total output measured by Gross Domestic Product (GDP), the agric sector has lost its leading position to the services sector.
The sector’s contribution was 25.3 per cent in 2011 but slumped to 22.9 per cent in 2012. It further dropped to 22.4 per cent before inching to 22 per cent in 2015.
Usage of sector allocations
Allocations to the agriculture sector were spent on a number of projects between 2011 and 2015. Of the amount, GH¢64.8 million was used to fund the government’s fertiliser subsidy programme, with GH¢16.3 million going into the construction dams for irrigation purposes.
Some GH¢18.1 million was also used to rehabilitate aged dams. Another GH¢1.6 million was used to support the development of various fisheries infrastructure throughout the country.
Beyond that, an extra GH¢1.8 million of the sector’s share of oil proceeds was used as counterpart funding for various agriculture-related projects. Another GH¢199.4 million was also used to finance government projects, goods and services and investments captured under the agricultural sub-sector under the ABFA.
Some of the unclassified projects that appeared sparsely in the spending pattern were categorised as support for national programmes or projects, agriculture goods and services, agriculture investments, agriculture modernisation, among others.
Fisheries get big
Out of the GH¢329.4 million that went into the agricultural sector, about 40 per cent of it was used to support various interventions in the fisheries sub-sector within the five-year period.
So far, GH¢120.1 million out of the total allocation of GH¢329.4 million has been spent on rehabilitation of irrigation infrastructure, part payments for sea defence projects in fishing communities, payment for the rehabilitation of a laboratory at Tema and the construction of a Fisheries College.
Growth in this sub-sector has been volatile, recording positive and negative growth through the five-year period. It recorded a -8.7 growth in 2011, bounced back to a positive growth of 9.1 in 2012. Growth dipped further to 5.7 per cent in 2013 then to -5.6 per cent in 2014. The growth rate in the sub-sector is currently 1.3 per cent.
Impact not automatic
An Economist and Senior Lecturer at the University of Cape Coast (UCC), Dr John Gatsi, said in an interview that investments that were done in the sector would impact positively on growth.
Citing the fisheries infrastructure as an example, he said the Fisheries College that was being built from oil revenues would train people who will then apply the knowledge acquired to help boost fishing in the country.
“The focus of the ABFA in the agriculture sector is to develop the infrastructure. Those items have a period within which they will be completed and it will then begin to have development impacts,” he said.
Dr Gatsi also explained that it was important for people to manage their expectations on how the ABFA could transform the sector, given that investments in agriculture did not necessarily promote growth.
This, he said, is due to the fact that growth in agriculture, as is the case with the other sectors, occurs as a result of numerous factors, one of which is investments.
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