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Can oil revenue lift the “planting for food and jobs” policy?

  • SOURCE: | qwesa2big
  • The Agriculture sector contributes significantly to the GDP of most developing economies and Ghana is no exception. According to reports from the Ghana Statistical Service (2015), the sector contributed 19 per cent to the GDP of the country. However, a trend analysis of the report revealed that there was a decline in growth as compared with previous years whilst the industry sector recorded an increase in growth by 9.1 per cent. In 2014, the Agriculture sector grew by 4.6 per cent and dropped sharply to zero per cent in 2015. The reasons accounting for this decline can be attributed to a myriad of factors which includes the country’s inability to prioritize the sector.

    Made possible by the passage of the Petroleum Revenue Management Act 815 passed in 2011, the oil sector has since the discovery and production of oil in commercial quantities in 2011, contributed to the Agriculture sector. Section 21 (5) of the PRMA implores the Finance minister to prioritize not more than four sectors for capital spending in the absence of a national plan. The prioritization period spans for only three years. To this end, a cap was set on the following priority areas of the Annual Budget Funding Amount (ABFA) for the period 2011-2013 and 2014 -2016:

    1. Expenditure & Amortization of Loans for Oil and Gas Infrastructure
    2. Road and Other Infrastructure
    3. Agriculture Modernization
    4. Capacity Building (Including Oil and Gas)

    However, since the inception of this priority arrangement by the minister the Agriculture sector has benefitted the least in comparison to the rest. The oil sector has failed to lift the agriculture sector’s development.  Table 1 below gives us a trend analysis of the situation.

    Table 1: Spending of ABFA by Priority from 2011 – H1 2016

    Item Year
    2011 (GH¢) 2012 (GH¢) 2013 (GH¢) 2014 (GH¢) 2015 (GH¢) 2016 Half (GH¢)
    Expenditure & Amortization of Loans for Oil and Gas Infrastructure 20,000,000 100,000,000 137,920,847 163,084,572 439,234,363.92
    Road and Other Infrastructure 227,641,768 232,403,269 13,604,329 170,624,180 483,347,384 123,252,135.34
    Agriculture Modernization 13,147,652 72,471,824 372,074,147 215,691,357 59,544,174.03 10,967,243.69
    Capacity Building (Including Oil and Gas) 750,000 111,959,738 20,183,359 142,074,292.19 38,076,692.00
    Total 261,539,420 516,834,831 543,782,682 549,400,109 1,124,200,214 172,296,071

    Source: Various: Ministry of Finance (2013, 2014, 2015) Reconciliation Report on PHF; PIAC Semi Annual Report (2016)

    K kwabena








    The above clearly shows how the Agriculture sector has fared woefully compared to the other sectors over the six year period. Allocations to the Agriculture sector formed 5%, 14%, 68%, 39%, and 5.5% in 2011, 2012, 2013, 2014, 2015 and 2016 respectively. The trend shows a decline in the allocations to the sector which reflects poorly on our commitment as a country to revamp the Agriculture sector of the economy. The highest allocation was received in 2013 as a result of expenditure on irrigation, dams, roads and fertilizer. The other sectors are experiencing a steady increase in the allocations whilst the Agriculture sector have seen declines since 2013.  The question now is whether or not we prioritizing the Agriculture sector knowing our oil resources are exhaustible? What legacy can the oil revenue leave for the Agriculture sector?

    Consequently, the Agriculture sector’s contribution to GDP over the years has also declined steadily and this reflects the allocation of ABFA to the sector. It is therefore recommended that the government as a matter of urgency, allocate a large chunk of the ABFA amount if not all to support the Agriculture sector. Secondly, the government should clearly define which areas of the sector will be invested in. It is worthy of note that for many years now much of the Agriculture sector’s allocations have gone into the fisheries sector than the food production sector.

    President’s commitment to revive the Agric sector

    The president, Akuffo Addo, indicated his government’s commitment to elevate the Agric sector through his “planting for food and jobs” policy. He made this known to members of parliament in his maiden State of Nation Address (SONA) on Tuesday, February 21. He said “A national campaign; planting for food and jobs, will be launched to stimulate this activity. To initiate the campaign, the District Assemblies will be tasked to identify and register progressive farmers in each of the 216 districts. For too long our farmers have been left to cope by themselves without the necessary support from government.”

    He further added that an amount of 125 million Canadian dollars has been secured from Canada to support the initiative. “This will be anchored on the pillars that will transform agriculture; the provision of improved seeds, supply of fertilizers and the use of e-agriculture,” The President assured.

    This year marks another milestone for the priority areas to be capped by the minister since the three year period for the priority areas have expired. The finance minister, Ken Ofori Atta, is expected to present the government’s budget on 2nd March, 2017 and it is also expected that the president’s commitment to uplift the face of the Agriculture sector will be reflected in the budget. It will be of utmost interest to know how much in percentage terms will be earmarked for the Agriculture sector.

    www.reportingoilandgas- Kwabena Tabiri


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