Agribusiness Investment in Agricultural Commercialisation in Ghana: Rethinking Policy Incentives

Abstract

Agriculture is a major economic activity in Ghana, contributing 20 per cent to Gross Domestic Product (GDP) and employing over 42 per cent of the active labour force. Despite efforts to modernise the agricultural sector, it remains largely subsistence based. In recognition that increased investment can help transform the agricultural sector, the government of Ghana and its development partners have implemented various programmes to attract private investors into the sector. There is, however, little understanding of how businesses respond to incentive packages in the Ghanaian agricultural sector. The brief, which is based on primary data collected through in-depth interviews with agribusiness leaders and key informants, argues that the most important factors that influence investment decisions in the agricultural sector in Ghana are access to market, potential for higher profit, interest of the business leaders and political stability. Although tax incentives are beneficial to farmers, they do not really stimulate investments in the agriculture sector. The brief calls on the government and its development partners to address the barriers to investment in the agricultural sector, which include unfavourable land tenure systems, poor infrastructure, high interest rates and lack of access to finance.