In its second iteration of its Growth and Poverty Reduction Strategy, Ghana’s government recently set an ambitious target of 2015 to reach middle-income status.[1] It is fair to say that, as agricultural growth goes, so goes the Ghanaian economy: as stated at the outset of this report, the economy remains heavily reliant on agriculture, accounting for over one-third of GDP and over 55% of employment. At the heart of the government’s economic growth strategy lies its desire to increase and diversify agricultural-related exports.[2]
Ghana has made substantial progress in recent years toward creating an environment conducive to domestic and international trade in agricultural products. Macroeconomic stability is markedly improved from 10 years ago: inflation is at 10% down from 30% in 1998; the fiscal and external deficits have improved; and the debt burden was brought to a more manageable level. The freely convertible cedi is now competitive among a basket of currencies based on a managed float.[3]
In addition to the increasingly stable macroeconomic environment, the trade regime is relatively liberal. Ghana’s government has removed import and export prohibitions, eliminated wasteful subsidies, and reduced the number of tariff bands to four (0%, 5%10% and 20%), with agricultural imports facing the highest average tariffs at 15.6%.
But fundamental constraints to Ghanaian food security and the competitiveness of Ghanaian agribusinesses remain. These include access to land, water, skilled labor, appropriate finance, electricity, and infrastructure, which each present significant challenges to growing a productive agribusiness sector. Meeting the growth and diversification targets set by the government will require an ambitious reform program.
This chapter assesses the enabling environment for trade in agricultural products as a continuum of activities from the “farm gate” to the end market, with an eye toward systemic reforms that would, if undertaken, benefit multiple value chains. From producer knowledge of end markets to storage and processing, to trade facilitation and trade policy, this chapter addresses issues of particular significance to agribusinesses producing for local, regional, and international markets.
The World Bank’s Doing Business report ranks Ghana relatively well in its Trading Across Borders category (76 out of 181 countries surveyed). The AgCLIR scores arrived at in this diagnostic, however, show that grave constraints in the agricultural sector remain, however. Three of the four facets of the review tend toward finding more negative than positive attributes within the trade regime, with only the legal framework falling at the line between negative and positive. Accordingly, this chapter raises many points about opportunities in Ghana’s international trade in agricultural products and makes a number of recommendations for continued reform.
[1] Government of Ghana, Growth and Poverty Reduction (GPRS II) Medium-Term Strategy (2006–2009).
[2]See, e.g., Ghana’s Export Strategy (2008).
[3] J.S.L. Abbey et al., Study on the Appropriate Exchange Rate Regime for a Competitive Export Led Growth Strategy for Ghana (USAID TIPCEE Project, 2007).
