A report by the Africa Centre for Energy Policy (ACEP) has revealed that Government has consistently under disbursed allocations of the ABFA fund towards the Agriculture sector.
The report recommends that petroleum revenue allocation should contribute to increase in total government expenditure and investment in agriculture to adequately address the challenges of the agriculture sector, in order to achieve the objectives of the Petroleum Revenue Management Act (PRMA).
Also, it recommends that investments must be deliberate and targeted to essential areas necessary for the growth of sectors.
Additionally, the government must ensure that planned ABFA allocation to the agriculture sector must be fully disbursed, the report suggests.
With increasing hopes to ensure that agriculture still remains the main driver of economic growth and development, several policies and programmes have been undertaken to accelerate this process. One of which is to allocate a share of petroleum revenue to budgetary support through the Annual Budget Funding Amount (ABFA).
One of the priority areas for ABFA funding is for allocations to be made towards agriculture. The other priority areas include; road, rail and other infrastructure development; physical infrastructure and Service Delivery in Education; physical infrastructure and Service Delivery in Health.
| Priority Areas for ABFA allocation from 2011-2019 | |
| 2011-2016 | 2017-2019 |
| Road and other Infrastructure | Road, Rail and other Infrastructure Development |
| Agriculture Modernisation | Agriculture |
| Capacity Building (including oil and gas) | Physical infrastructure and Service Delivery in Education |
| Expenditure & Amortization of Loans for Oil and Gas Infrastructure | Physical infrastructure and Service Delivery in Health. |
However, an assessment of the contribution of the petroleum revenue on the agriculture sector has been declining over the years.
According to the report by Africa Centre for Energy Policy (ACEP), the sector has received cumulative allocations of about GHS 600 million ($ 107.5 million) as at the end of 2019. Between 2012 and 2019, a cumulative amount of about GHS 1.4 billion ($250.9 million) has been contributed towards the agriculture sector.
The report found out that using data from the Controller and Accountant General’s department (CAGD) indicate that “when actual COFOG measures are used, Ghana requires increased effort to meet the CAADP’s target of allocating 10 percent of total government expenditure to the agriculture sector.” This is largely different from that of the review made by the Ministry of Food and Agriculture, the report notes.
From the economic development literature, stage two of Rostow’s five stages of economic growth: the preconditions for take-off, suggests that for the Agriculture sector to move away from the traditional stage, Agriculture must become more mechanized in order to facilitate more trade in agriculture outputs. This will only be possible when the needed investment towards the sector is advanced fully towards it.
The Petroleum Revenue Management Act (PRMA), 2011 (Act 815) was passed to provide the framework to manage petroleum revenues after commercial production began in 2010.
The PRMA designates the allocation of a portion of petroleum revenue to budgetary support through the ABFA. The Act stipulates that there should be prioritization of a maximum of four areas for ABFA funding.
“Prioritizing areas for ABFA funding is relevant to maximize the rate of economic wellbeing of all citizens.”
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