Despite Crucial Economic Impact, Agriculture Attracts Less Than 1% of Ghana’s Total FDI in Six Years

Despite being touted as the backbone of Ghana’s economic development, contributing over 21% to GDP, the agriculture sector continues to suffer a chronic financing gap both locally and internationally.

A latest Critical Analysis of Key Economic Issues by IMANI Africa has raised red flags about the disturbing underfunding situation which is plaguing the sector, revealing that between 2018 and 2024, agriculture attracted less than 1% of the country’s total Foreign Direct Investment (FDI) inflows.

According to data sourced from the Ghana Investment Promotion Centre (GIPC) and cited in the IMANI report, FDI into agriculture averaged a meagre 0.9% over the six-year period.

The latest edition of the Criticality Analysis of the Key Economic Policies further revealed that in 2024 alone, only $1.5 million was recorded for just three agricultural projects, representing a paltry 0.24% of the total FDI inflow of $617.6 million for that year.

This situation, the policy think tank finds to be particularly concerning given agriculture’s crucial role in food security, employment, and rural development. In addition, IMANI cannot fathom why the sector that is very critical in anchoring the stability of the local currency would experience such a funding gap.

“Agriculture contributes over 21% of GDP, but its access to finance remains disproportionately low. Data from the Ghana Investment Promotion Centre (GIPC Quarterly Report) shows that FDI into agriculture averaged less than 2% of total inflows between 2018 and 2024,” IMANI indicated.

It continued that, “For instance, only $1.5 million was recorded for three projects in 2024, representing just 0.24% of the year’s total FDI of $617.6 million. Averagely, the share of FDI inflows to the agric sector is less than 1%. Of the total FDI flows over the last 6 years.”

The problem, the policy think tank noted, is not limited to foreign investment. Domestic financial institutions have also consistently sidelined the sector.

Agriculture receives less than 5% of total bank lending, despite the sector’s high impact, especially in cushioning households against food inflation.

“Even with efforts by institutions like GIRSAL to de-risk lending to the sector, systemic challenges persist,” the report noted. “Loans to agricultural value chain actors are priced higher due to perceived risks, and the lack of traditional collateral continues to disqualify smallholder farmers and agribusinesses.”

IMANI says there is an urgent need for strategic investment interventions to unlock the sector’s full potential. The think tank argues that without tailored credit schemes, blended finance models, and innovative investment tools that accommodate the unique needs of agricultural ventures, Ghana risks missing out on transformative growth in a sector rich with potential.

This analysis comes at a time when food inflation continues to remain elevated despite declining inflation, putting pressure on household incomes.

It is therefore anticipated that the government, through its agricultural initiatives, will chart a new path that will ensure that the sector is adequately funded as part of measures to address food inflation and anchor the cedi’s appreciation.

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