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Opportunity sectors
In Ghana, the two sectors with the highest expected growth in terms of GDP value added are the services sector and the agriculture sector. KPMG reported in its June 2020 “Doing Business in Ghana” report that over the medium term, services sector growth in 2020 should average 6.3%, making it the highest average growth sector. The agriculture sector is expected to grow 5.4% on average, making it the second-highest growth sector, which is promising despite its low growth rate in 2019.[1]
In addition to their contribution to economic growth, the two sectors are also valuable when it comes to job creation.[2] Within the agriculture sector, agribusiness has the potential to create 750 jobs for every $1 million of goods and services produced. Within the services sector, the ICT subsector offers unprecedented opportunities. While the sector’s job potential has yet to be realised, it is estimated that eight new jobs will be created for each additional job in ICT.[3]
Within the services sector, ICT is the fastest expanding sector in Ghana. Based on year-on-year growth rates in the 1st quarter of 2021, ICT was expanding by 22.1% within the services sector, making it one of the main drivers of GDP growth. Within Ghana’s ICT sector, telecommunications services are the dominant subsector, having the highest share of employees (45.3%) and establishments (40.2%) relative to other ICT subsectors, such as programming and broadcasting activities (share of employees 22.8%, establishments 11.6%), or publishing activities (share of employees 7.8%, establishments 5.0%).[4] ICT is further expected to have a major impact on other industries, including banking, retail and transport, agriculture, hospitality, education, and healthcare.[5]
“ICT and digitization have the tendency to grow faster, create more jobs, and transform the society in general. Accra Digital Centre can be used as Ghana’s Silicon Valley and can employ a lot of people.” (Alex Frimpong, Ghana Employers’ Association)
“ICT as a cross-cutting sector is growing, particularly because of the COVID-19 pandemic.” (Alex Frimpong, Ghana Employers’ Association)
The agriculture sector holds strong potential to be an engine of growth and job creation.[6] Agriculture in Ghana is an important contributor to the country’s exports and provides valuable inputs for the manufacturing sector in Ghana. The sector contributes 17.31% to the country’s GDP.[7] In fact, it is estimated that two-thirds of non-oil manufacturing in Ghana depends on raw materials from agriculture. Furthermore, agriculture remains a crucial sector for job creation, particularly in rural areas of the country.[8]
“The agriculture sector will create more jobs and will transform rural societies in particular. The country is built on agriculture and the sector will continue to employ more people in the coming years”. (Michael Boateng, GIZ)
The selection of the two sectors was further informed by interviews with entrepreneurship ecosystem players on sector growth potential. A total of 22 people were interviewed during the research. Six people interviewed for this study identified agriculture and agro-processing as having potential for growth, and six also pointed to information technology and digitalization. Four people mentioned hospitality as harbouring growth potential, while the creative arts, real estate, and the education sector were only brought up by one person each. Focus group participants also indicated that growth potential can mostly be found in agriculture, especially in agro-processing, and in ICT and digitisation.
Based on the economic statistics discussed above and on the findings from the interviews, agriculture/ agribusiness, and ICT have been identified as two promising growth sectors. The sizes of these sectors, in addition to the opportunities they present for innovation and job creation, led to their selection for further analysis.
The potential of agriculture and agribusiness
Ghana’s agriculture sector remains an important one in terms of job creation and innovation potential. It is expected to remain the second highest growth sector, behind the services sector, and it is responsible for producing crucial inputs for the country’s manufacturing sector.[1] As noted above, the sector holds high potential for development impact due to its capacity for job creation (750 jobs for every additional $1 million of output).
Potential arises through transformation and processing activities as well as increased local production and market linkages.[2] Furthermore, a range of new digital technologies can improve the efficiency and impact of business models in the sector.[3] Digitisation of the sector has the capacity to address a wide range of factors and conditions affecting farms, farmers, and the agri-food sector as a whole.[4] Satellite-based sensors, for example, can produce higher resolution and more accurate data products for agriculture. These kinds of new developments combined with the sector’s job creation potential make it an attractive one for Ghana’s youth[5], particularly in rural regions.[6]
There are great opportunities for Ghana to focus agricultural production more on domestic markets for industrial use and food consumption, with special potential in food processing. Ghana’s population is increasing steadily, while urbanization continues apace. Rising income and increased demand for processed food are driving Ghana’s import costs, since the country is currently a net importer of raw and processed food.[7] Ghana’s food imports accounted for 16.8% of Ghana’s total merchandise imports, estimated at $13.3 billion, in 2015. That total is expected to increase fourfold over the next 20 years.[8],[9] At the same time, however, Ghana is home to favourable conditions for agribusiness. It has large resources of freshwater in addition to optimal weather and soil conditions for many crops. There have also been significant improvements in the business environment in recent years, with significant potential in supplying local and global markets. [10] Therefore, the country has a substantial opportunity to grow its domestic market and reduce its reliance on agricultural imports in the future.[11]
Despite growth potential in the agricultural sector, there are several challenges that must be addressed[12]. First and foremost, the sector lacks sufficient investments and the kind of large-scale technological transformation that could contribute to increased productivity.[13] The poor financial support is mainly due to uncertainties within the agriculture sector, such as changing climate conditions, unstructured markets, and unreliable supply chains.[14] The absence of working capital, in particular, is hampering growth in the sector since it prevents farmers from acquiring inputs like seedlings and fertilizer, and from hiring labour, among other issues[15]. The sector also experiences post-harvest losses due to poor transportation and inadequate storage facilities, a state of affairs disadvantageous to the use of agro-produce as inputs in the industrial sector.[16] The lack of reliable information for farmers and other stakeholders to help them obtain fair prices for their goods is a further drag on growth.[17] All those factors together mean that Ghana’s agriculture sector suffers from low productivity, which results in depressed earnings and underemployment.
This is particularly true for cocoa, Ghana’s primary expanding agriculture subsector. Cocoa remains the country’s most important export crop, representing 81% of agricultural exports and 25% of foreign exchange earnings.[18] Although its growth rate is significant (4.9% in the first quarter of 2021[19]), it could be much higher, since the sector is still dominated by primary production with little value addition and overall low productivity.[20]
However, recent innovations and digitisation in Ghana’s agricultural sector could address the challenges described above. For example, various companies have developed solutions that aim to enhance farmers’ productivity (see Box 2).
Box 2: Digital solutions to enhance farmer productivity
Various digital solutions have emerged to address low productivity in the sector, which is the result of a host of issues, including a lack of information, uncertainties, and insufficient investment. These solutions may also contribute to the attractiveness of the sector for youth.
- The Kumasi based business farmerline.org is a voice service and Short Message Service (SMS) platform that provides smallholders with greater access to information, enabling them to make more informed decisions. Via a mobile app, farmers registered with farmerline.org receive valuable updates, including market prices, weather forecasts, financing information, input dealers, and farming tips[21]. The Sustainable African Youth Enterprise and Technologies (SAYeTECH) designs and builds smart agricultural machinery. It created a hardware-software ecosystem that combines robust, versatile, and small agriculture tools and machinery with Internet of Things (IoT) capability and Artificial Intelligence (AI) to provide customised solutions for each farm, thereby increasing productivity and the quality of farm output. This innovation could be enhanced and supported to reach more rural farmers to boost efficiency and productivity. Increased use of these digital technologies and related innovations by farmers present new opportunities and will create employment for youth.
“Digital technologies in agriculture have huge potential in reducing the food supply deficit in Ghana.” (Jeffrey Boakye Appiagyei, SAYeTECH)
- The Grameen Foundation has also designed and implemented AgroTech Smartex, a mobile application to improve farm productivity and profitability. This app helps reduce risks, overhead costs, and other constraints faced by smallholder farmers and actors who transact with them[22][23].
- On the finance side, the Incentive-Based Risk-Sharing System for Agricultural Lending Project (GIRSAL) is seeking to lower the risk of agribusiness investment by issuing credit guarantees, among other interventions.[24] GIRSAL is a non-bank financial institution that receives funding from the Bank of Ghana and the African Development Bank, and its principal shareholder is the Ministry of Finance. GIRSAL activities include supply-side and demand-side interventions to enhance the overall amount of credit to the country’s agribusiness sector. [25]
On the public side, the Ministry of Food and Agriculture (MOFA) launched an E-Agriculture programme in 2014 to respond to broader challenges in the agricultural innovation system (McNamara et al., 2014). Agricultural Extension Assistants (AEA) were recruited and trained to use the E-extension platform on smartphones. Among numerous other functions, the platform can provide timely information on the extent and location of events such as (new) pest infestations and droughts[26].
The potential of Ghana’s ICT sector
The ICT sector is a new driver of economic growth in Ghana, offering unprecedented investment and job creation opportunities. This subsector has been identified as one of the main expanding subsectors in Ghana’s economy.[1] Its contribution to Ghana’s overall GDP has increased steadily in recent years, making it one of the best performing subsectors in the country[2]. In 2017, ICT services made up 3.6% of the country’s GDP, representing $1.7 billion[3]. In isolation, it is an important source of growth, but it also benefits other sectors of the economy. ICT is expected to have significant, cross-cutting impact on several industries, including banking, insurance, retail, transportation, agriculture, education, and healthcare.[4] For example, traditional banking is losing market share to online and mobile banking, brick-and-mortar commerce is being displaced by e-commerce, and education is being challenged by Massive Open Online Courses (MOOCs). The impact of ICT on productivity is significant, with businesses using the internet experiencing productivity 3.7 times higher than those that do not.[5]
Indeed, Ghana is well prepared for leveraging the potential of the ICT sector in terms of physical infrastructure and network support, as reflected in the country’s DERI score. Ghana has high-performance network coverage, high mobile device ownership, and a high rate of broadband subscription, as well as good coverage of GitHub Accounts (see also chapters 3.1.5 Physical and digital infrastructure, and 3.1.6 Network and support for more information). [6]
In addition, the government of Ghana is investing in developing the country into a digital hub. The Ghana Beyond Aid agenda puts the digital economic transformation at its centre.[7] The state’s e-transform programme, which is backed by the World Bank, seeks to introduce unique electronic identification systems that confirm citizens’ rights to public services through identity validation while promoting improved access to online transactions and financial and other services. It covers areas as diverse as job creation, nurturing entrepreneurship, healthcare, and public administration, and it provides opportunities to youth and women in the ICT sector.[8]
While the prospect of employment in the ICT sector is great as it continues to grow, it has yet to realise its potential for job creation. Currently, ICT only accounts for 1.2% of jobs in business establishments and is therefore not yet a large employment provider. However, it is estimated that up to eight additional jobs will be created for each new job in the ICT sector. Demand in Ghana’s labour force for digital skills is expected to reach nearly 9 million people by 2030.[9] For example, microwork platforms are increasingly becoming a source of jobs for Ghana’s youth. It is estimated that 1% of people who use the internet are microwork users, with most of them being youth and women.[10][11]
There are a number of significant barriers preventing Ghana’s ICT sector from reaching its full potential. One significant hurdle is the lack of a digitally literate workforce. Most Ghanaians do not possess skills beyond those necessary to operate a computer or tablet.[12] More specialized labour skills – like coding, cybersecurity, web design, and software development – are particularly rare.[13] At the same time, survival rates of new ICT businesses are low due to, among other factors, limited entrepreneurship and business skills among Ghanaians and missing links in the incubation and acceleration stages.[14] Lastly, regulatory gaps and grey areas on topics such as data storage, consumer protection, and general digital laws still remain and need to be addressed.[15] The current demands for digital solutions brought about by the COVID-19 pandemic may, however, create incentives for various players to address these gaps.[16]
Box 3: The Fourth Industrial Revolution (4IR) in Ghana
The 4IR refers to the fusion of advanced digital technologies – such as the IoT, AI, drones, robots, and clouds, among others – with physical assets. The 4IR revolutionises the way traditional businesses operate and increases their efficiency and profitability. It further enables businesses, organisations, customers, and society to use information, be more responsive, and make smarter decisions.[17] As such, the 4IR has the potential to transform economies worldwide and ultimately improve the wellbeing of a country’s citizens.[18]
The 4IR also has the potential to create jobs. This should prove particularly attractive and accessible to Ghana’s youth, since young people are still in the process of developing their skillsets and are highly adaptive to technological change.[19] Whether this potential is realised, however, is highly dependent on how well Ghana’s educational systems and labour policies are set up to prepare workforces for digital jobs in the future.[20]
A recent Bank study assessing the readiness of various African countries for the 4IR found Ghana to be only averagely prepared, though on the brink of becoming a high potential country. [21] Nevertheless, Ghana has pushed forward some advanced digital technologies in recent years. Some examples include:
Drone technology: Only recently, Ghana updated its drone regulatory guidelines, potentially paving the way to the safe use of drone technology in the country.[22] One example of how drone technology can be used is the Zipline drone delivery system for medical supplies. The Ghana Health Service started working with Zipline in 2019.[23] The company uses drone technology to deliver health products, such as vaccines and blood for transfusions, to over 2,000 healthcare facilities in the country.[24] The service operates 24/7 and enables health workers in the country to order medical supplies via text message.[25]
Blockchain technology: The government of Ghana signed a contract with IBM in 2018 to take advantage of the company’s blockchain capabilities to modernise processes in the field of land registries.[26] This was a significant milestone for the country, as the technology enables Ghana to build a land registry and verify ownership. This in turn enables banks to accept land as collateral, which was not possible before.[27]
AI technology: In 2018, Google chose Accra to host an AI research centre in Africa that aims to bring machine-learning researchers and engineers together and to collaborate with local universities and policymakers to explore potential uses of AI in Africa.[28] Furthermore, young Ghanaian software developers are working towards building AI platforms to support the country’s youth, as they set up their own businesses and create jobs.[29] SuaCode, for example, provides online coding courses to democratise coding education in Africa using smartphones and AI. The courses introduce learners to basic software programming.[30],[31]
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References
[1] Ghana Statistical Service. 2021. Newsletter Quarterly Gross Domestic Product (QGDP) First Quarter 2021.
[2] World Bank Group. 2019. Ghana Digital Economy Diagnostic. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/34366 License: CC BY 3.0 IGO.
[3] World Bank Group. 2019. Ghana Digital Economy Diagnostic. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/34366 License: CC BY 3.0 IGO.
[4] World Bank Group. 2017. Creating Markets in Ghana: Country Private Sector Diagnostic. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/30212 License: CC BY 3.0 IGO
[5] Cirera, Xavier, Filipe Lage, and Leonard Sabetti. 2016. ICT use, innovation, and productivity: evidence from Sub-Saharan Africa.” World Bank Policy Research Working Paper 7868.
[6] GitHub, Inc. a for-profit company, is a provider of internet hosting for software development and version control using Git. It offers the distributed version control and source code management functionality of Git, plus its own features. (see https://en.wikipedia.org/wiki/GitHub and https://github.com/)
[7] Ghana Beyond Aid Committee. 2019. Ghana Beyond Aid Charter and Strategy Document.
[8] Ministry of Communications and Digitalization. n.d. “E-Transform Project”. Accessed July 2, 2021. https://www.moc.gov.gh/e-transform-project.
[9] International Finance Corporation (IFC) LEK Consulting. 2019. Digital skills in Sub-Saharan Africa: spotlight on Ghana.
[10] Microwork refers to online platforms that act as intermediaries to perform small tasks (see Dalle, Jean-Michel, et al. 2017. Microwork platforms as enablers to new ecosystems and business models: the challenge of managing difficult tasks. International Journal of Technology Management 75.1-4: 55-72.)
[11] World Bank Group. 2017. Creating Markets in Ghana: Country Private Sector Diagnostic. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/30212 License: CC BY 3.0 IGO
[12] World Bank Group. 2019. Ghana Digital Economy Diagnostic. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/34366 License: CC BY 3.0 IGO.
[13] International Finance Corporation (IFC) LEK Consulting. 2019. Digital skills in Sub-Saharan Africa: spotlight on Ghana.
[14] World Bank Group. 2017. Creating Markets in Ghana: Country Private Sector Diagnostic. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/30212 License: CC BY 3.0 IGO
[15] World Bank Group. 2019. Ghana Digital Economy Diagnostic. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/34366 License: CC BY 3.0 IGO.
[16] ICT emerges major driver of Ghana’s economy in Q1, Standard Bank Group’s results, 2020
[17] Deloitte Development LLC (Firm). 2020. The Fourth Industrial Revolution: at the intersection of readiness and responsibility.
[18] African Development Bank. 2019. Potential of the fourth industrial revolution in Africa. Study Report: Unlocking the potential of the fourth industrial revolution in Africa.
[19] Fox, Louise, and Landry Signé. 2021. The Fourth Industrial Revolution (4IR) and the Future of Work: Could this bring Good Jobs to Africa?
[20] Leopold, Till Alexander, et al. 2017. The future of jobs and skills in Africa: preparing the region for the Fourth Industrial Revolution. World Economic Forum. http://www3. weforum. org/docs/WEF_EGW_FOJ_Africa. pdf.
[21] African Development Bank. 2019. Potential of the fourth industrial revolution in Africa. Study Report: Unlocking the potential of the fourth industrial revolution in Africa.
[22] Ghana Civil Aviation Authority. n.d. “RPAS Resources”. Accessed September 20, 2021. https://www.gcaa.com.gh/web/?page_id=859.
[23] Asiedu, Kwasi Gyamfi. 2019. “Drones are helping Ghana’s mothers fight yellow fever”. Accessed September 20, 2021. https://www.weforum.org/agenda/2019/05/an-ambitious-drone-delivery-health-service-in-ghana-is-tackling-key-logistics-challenges/.
[24] Zipline. n.d. “Vital, on-demand delivery for the world”. Accessed September 20, 2021. https://flyzipline.com/company/.
[25] African Development Bank. 2019. Potential of the fourth industrial revolution in Africa. Study Report: Unlocking the potential of the fourth industrial revolution in Africa.
[26] African Development Bank. 2019. Potential of the fourth industrial revolution in Africa. Study Report: Unlocking the potential of the fourth industrial revolution in Africa.
[27] Ghana Web. 2018. “Blockchain technology to revolutionise land administration processes”. Accessed September 20, 2021. https://www.ghanaweb.com/GhanaHomePage/business/Blockchain-technology-to-revolutionise-land-administration-processes-666920.
[28] Google. 2018. “Google AI in Ghana”. Accessed September 20, 2019. https://www.blog.google/around-the-globe/google-africa/google-ai-ghana/.
[29] Kaledezi, Isaac. 2021. “Ghana’s artificial intelligence sector booming”. In Deutsche Welle. Accessed September 20, 2021. https://www.dw.com/en/ghanas-artificial-intelligence-sector-booming/av-57820145.
[30] SuaCode. n.d. “Democratizing coding education across Africa using smartphones and Artificial Intelligence”. Accessed September 20, 2021. https://suacode.ai/
[31] NSESA Foundation. N.d. “SuaCode – Breaking the Coding Barrier in Africa with Smartphones”. Accessed September 20, 2021. https://nsesafoundation.org/suacode/.[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row]
