Agri-Levy for Agriculture Will Spur Sustainable Economic Growth

By Taluta Gbanha Mahama

We celebrated our 68th Independence Day on 6th March, 2025 a few days ago. We feel satisfied that we witnessed a sustained democracy for over 33 years with successful change of governments through the ballot and handovers.
The country remained relatively peaceful with modest rate of development though not satisfying.
Despite these successes, many a Ghanaian feel disappointed with our burdensome problems- unemployment, corruption in public life, poor sanitation, high cost of living, poor infrastructure, general mistrust in state institutions and many more.
We have consistently proffered solutions and enacted the most excellent of laws to regulate our way of life to create a prosperous society for all Ghanaians to enjoy but it seems we are not picking the right fruits.
The current government continued the solution search journey through the recent Economic Dialogue, National Education Forum and the Constitutional Review Committee. Hopefully, we will get it right this time round.
Determined not to be left out in this solution search to bring sustainable development, I propose that the new government creates a tax handle dedicated to financing agriculture and agribusiness in Ghana. Rome was not built in a day. It has to be pain, then joy.
We need to accept this reality if we are truly committed to developing our country. I expect this to find expression as the Finance Minister reads the 2025 Budget tomorrow.
Since childhood, I have heard people say and I believe that agriculture is the backbone of the Ghanaian economy. Being the backbone, it is essential we prioritize funding to it to increase output, jobs and reduce imports of both raw and finished goods.
Agriculture is very critical to our survival and we need to give it a facelift. According to a November, 2022 report of the Ghana Investment Promotion Council (GIPC) titled, “Ghana’s Agriculture Sector Report,” the Agriculture Sector in 2021 employed a substantial 33 percent of the labour force in Ghana.
The same report continued that Ghana imports a large amount of paddy rice on an annual basis; 1.3 million tonnes of paddy rice was imported in 2020 as compared to 1 million tonnes produced locally. Aside paddy rice, a significant amount of milled rice is imported to supplement local supply. In fact, we import all the food we can produce in abundance locally.
The World Bank reported that Ghana’s total arable land in 2021 was 4.71 million hectares. A large portion of this land is not fully taken advantage of by Ghanaian farmers. The reason is clear, there are no incentives pushing them to invest in these lands. The biggest of these incentives finance.
Does it not look like a crime for a country to have this substantial quantity of arable land and not fully utilize it? Must we not be wailing if the import statistics above is read to our hearing? We require radical leadership to ensure that we enhance agricultural growth and one of the inputs to enhancing agricultural growth is an Agri-Levy.
Have we paused to ask ourselves why the huge gap between agriculture and industry growth rates as a percentage of GDP in Ghana over the years? For instance, from 2009 to 2023, (15 years), agriculture grew by an average 4.29 percent, industry averaged 6.21 percent and overall real GDP averaged 6 percent.
The biggest absorber of agricultural produce as raw materials, manufacturing (a subsector of industry) grew by an average 4.37 percent. Except agriculture, all the other sectors mentioned above have witnessed double digit growth rates in some of the years during the 15-year period.
The statistics prove that agriculture is slow in growth compared to industry, manufacturing and overall GDP. This means that agriculture is not producing enough to serve the manufacturing sector. No wonder the volume of imports was too high each year.
By importing more, we are creating jobs in other countries to our own detriment. We can reduce the high unemployment rate and imports if we commit to innovative ways of financing agriculture.
The GIPC report indicated that chicken imports exceeded local production by 212 thousand tonnes and represents about 84% of the total meat imports in 2020. Additionally, we imported 35 thousand tonnes of cattle products (beef, veal and offal) to supplement local production of cattle.
Again, Ghana has consistently run a trade deficit in the import and export of fish between 2009 and 2018. In 2018, Ghana imported 193,690 Mt and exported 73,622 Mt of fish culminating in a net import of 119,068 Mt.
Such a significant dependence on the international market presents a significant opportunity for local production. To boost local production, we need to commit to a dedicated source funding for agriculture in Ghana. We have enacted Act 852 to support health insurance, Act 972 to provide infrastructure for education, Act 899 to address the funding deficits in our energy sector and Act 877 to provide general infrastructure for Ghanaians.
We have also recently implemented COVID Levy, Sanitation and Pollution Levy and E-Levy to tackle serious issues of concern to us as a country. The time is now right for us to think of agriculture and create a tax handle for it to spur economic development.
President Mahama’s actions prove that his government mean well for agriculture. He promised in the NDC Manifesto to establish Farmer Service Centres and Farm Banks; provide free fertilizer to cocoa farmers; revive the already ‘dead’ cotton industry; enhance production capabilities in key commercial crops such as shear, oil palm, cashew, coffee, rubber, coconut, mango, and citrus; and implement a Broiler Production Cooperatives (BPC) project supporting over 160 thousand rural women to raise 16 million birds every six (6) months.
Several other excellent promises including the establishment of a Cashew Development Board will mean that more money will be needed to realize these promises. Without a dedicated source of funding, it will be hard to succeed.
Some of President Mahama’s appointments are also significant and worthy of commendation. Aside appointing the Minister for Agriculture, the Trade and Industry Ministry has been renamed to include Agribusiness. He has also appointed a Director of Presidential Initiatives in Agriculture and Agribusiness at the Presidency, Peter Boamah Otokunor.
The president’s appointments indicate that he is not only interested in only production but the entire value chain and all the activities and opportunities agriculture provides. To fund this noble vision is not going to be easy given the poor cash flows to the agriculture sector in the past years.
Even in the advanced world where technology is high and agriculture is highly developed, they still spend high and implement subsidy programmes to boost agricultural growth.
The European Union (EU) in 1962 launched, the Common Agricultural Policy (CAP). It aims to support farmers and improve agricultural productivity leading to a stable supply of affordable food; safeguard farmers to make a reasonable living; help tackle climate change and the sustainable management of natural resources; maintain rural areas and landscapes across the EU; and keep the rural economy alive by promoting jobs in farming, agri-food industries and associated sectors.
The CAP is funded from the resources of the EU’s budget and there is an already implemented CAP Strategic Plan spanning 2023 to 2027. The plan is designed to support farmers across the 27 EU countries and to make a significant contribution to the ambitions of the European Green Deal, and Biodiversity Strategy.
Not all, the OECD reports that in 2021‑23, almost four-fifths of all positive support to agriculture was provided in four large economies: China (37%), United States (15%), India (14%) and the European Union (13%). This is a major change from the early 2000s, when the European Union, the United States and Japan represented 26%, 20% and 16% of the total support respectively. Clearly the developed economies prioritize agriculture and are outsmarting one another in agricultural spending.
Ghana’s commitment to agricultural spending is very disturbing and not matching other parts of the world as indicated above. According to the Ministry of Food and Agriculture (MOFA), we spent GH¢973.39 million representing 82% of the approved budget of GH¢1,186.52 million in 2019.
The expenditure for 2020 was GH¢1,113.67 million representing 80.77% of the approved budget of GH¢1,378.86 million. In 2021, the Ministry spent a total of GH¢1,432.82million representing 90.48 of approved budget.
In 2022, MOFA was initially allocated an amount of GH₵1,103.17 million at appropriation. This was later reviewed to GH₵961.00 million at the mid-year fiscal policy review. The total Government of Ghana (GOG) contribution including Annual Budgetary Funding Amount (ABFA) and Internally Generated Funds (IGF) was GH₵667.899million.
This constituted 69.5% of the total budget. We are not fulfilling the budget and worse is that the percentage of actual spending compared to budget keep declining. This does not speak well of our commitment to agricultural financing.
It is time to rise. The government must support the agriculture sector to produce enough to feed the industrial sector and further the 24-hour Economy; increase exports and curtail imports; create jobs; and above all ensure prosperity and sustainable economic growth.
This is possible with a dedicated source of funding for agriculture and agribusiness. An Agri-Levy must be now if we want to get there, the promised land!