Infrastructure mustn't displace agric

…PwC warns in budget commentary

Government's efforts to narrow the country's infrastructure deficit by boosting spending on roads projects should not be to the detriment of agriculture, which holds the biggest potential for curbing rising unemployment, PwC - the accounting, audit and tax firm - has said in a commentary on the 2014 budget.

Infrastructure development and agricultural modernisation are among four priority areas where oil revenues are permitted by law to be spent, but the former has benefitted from the lion's share since hydrocarbon income started flowing in 2011.

Last month in Parliament, some MPs were outraged that a meager 1.5 percent of the GHc 299.4million in oil revenues allocated to the 2013 fiscal budget was invested in agriculture, despite the sector suffering a streak of weak growth rates since 2011.

Agricultural growth rates of 0.8 percent in 2011, 1.3 percent in 2012 and an estimated 3.4 percent this year compare to 7.4 percent in 2008, 7.2 percent in 2009 and 5.3 percent in 2010. And the fact that the beginning of the sector's reversal of fortunes coincided with the onset of oil production has not been lost on many.

‘‘Government needs to ensure that its attempt to bridge the infrastructural gap is not done at the expense of key infrastructural sectors such as agriculture,” PwC said, adding that this year's allocation of 15 percent of the budget receipts from oil, also known as the Annual Budget Funding Amount (ABFA), “should be maintained and subsequently increased to prevent a possible Dutch disease episode”.

The share of agriculture i Ghana's GDP shrank to 22.7 percent last year from 31 percent in 2008, according to the Ghana Statistical Service GSS). In the same period, services contribution rose from 48.6 percent to 50 percent, and industry - which law a boost from oil production - from 20.4 percent to 27.3 percent.

But PwC worried that the services sector lacks the capacity to generate as many jobs as the agricultural sector can, and tends to focus on people who meet some minimum educational standards. “Expansion and growth in the agriculture sector could be the panacea to rising unemployment in Ghana, particularly for the youth,” it said.

Despite losing jobs to services - as people move from working on farms to peddling small items in a stall or on the street, for instance - agriculture still provides more jobs than any sector, with its share of employment estimated at 41.6 percent in 2010.

Ghanaian farmers often lament the lack of a long-term vision and plan for agriculture, evidenced in the underfunding of the sector and the disturbing reality of donors sponsoring most initiatives and investments. Of the GHc 307million to be disbursed to the Ministry of Agriculture next year, 58 percent is expected from donors, leaving agricultural development at the mercy of foreign largesse.

Yet the donors have been more fickle lately, tying the release of funds to fiscal conditions. In the first nine months of this year, almost half of the monies expected from donors were not received because the European Union and other donor-governments were unhappy about Ghana's large 2012 budget deficit of 11.8 percent of GDP.

While agriculture's fortunes dwindle, the country's imports - of rice, vegetables, fruit-juice and poultry - continue to surge, putting pressure on the cedi's exchange rate, which has weakened by almost 25 percent since the beginning of 2012.

“Agricultural modernisation should be comprehensive, not sporadic,” PwC said. “There should be forward-integration with export-led manufacturing initiatives. Over time, this should lead to high agricultural productivity, a stronger private sector, more jobs with better pay, domestic capital formation, and a stronger currency.”