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Multinationals eye agric sector

Jan 23, 2017

Large multi-national companies are looking to invest in the country’s agricultural sector, but there are a number of challenges standing in their way, especially land acquisition bottlenecks Andrew Skipper, Partner and Head of Africa at global law firm Hogan Lovells, has said.

“There is opportunity for Africa to develop agri-business. There are a lot of multi-national companies looking to invest in land but also in fertilizer distribution and production, machinery, and the provision of agronomy expertise.

The first thing to establish is who owns the land or who will take the economic benefit from the ownership of the land even if you don’t transfer the land.

I think there is a major and growing opportunity for Africa and Ghana in agri-business especially in an era of diversification.

What we are finding is that, the world at the moment is very disrupted and uncertain. You can either find that scary or you can take that as an opportunity, and agri-business is just one area of opportunity,” said Andrew Skipper, whose law firm has been present in Africa for more than 30 years advising on trade and export financing, project development and finance, mergers and acquisitions, among others.

Poor funding of the agricultural sector, the complex land tenure system, and lack of data on farmers, among others, are major issues stifling the growth of the sector.

For instance, a Census of Agriculture, a statistical operation for collecting, processing and disseminating data on the structure of agriculture, covering the whole or a significant part of the country, is yet to be completed due to challenges with funding. The agric census, when complete, would provide investors with critical data on size of holding, land tenure, land use, crop area harvested, irrigation, livestock numbers, labour and other agricultural inputs.

The sector has become unattractive to the youth, as captured in a World Bank Group recent report, which notes that about 21 percent of the Ghanaian population has moved out of agriculture to other more productive economic sectors over the 18-year period between 1992 and 2010.

The services sector has been the biggest gainer. Employment in industry and services grew from 38 to 59 percent.

The myriad of challenges have conspired to consistently reduce the contribution of the agricultural sector to the country’s Gross Domestic Product (GDP). In 1992, the share of agric to GDP was 23.6 percent, growing to about 41 percent in 1995.

The Ghana Statistical Service reports that the contribution of agric to GDP declined from 29.8 percent in 2010 to 22 percent at the end of 2014. The sector now contributes around 20 percent, overtaken by the services sector.

The challenges notwithstanding, Mr. Skipper believes that the country can position itself to attract millions of dollars of investor monies looking for a home in Ghana’s agric sector.

“It is a massive opportunity for Africa and African entrepreneurs to take advantage of the new technologies in order to avoid some of the mistakes which would were made elsewhere in the world and bring things directly to people.

We work together with local lawyers because one of the big issues around agri-business is land tenure and who owns the land. These are issues around pre-colonial, post-colonial, tribal, and governmental rights. There may be four or five people who may claim ownership of the land,” Mr. Skipper said.

The Akufo-Addo led administration has vowed to restore the lost glory of the agricultural sector by investing heavily in the creation of dams in the three northern regions to make possible all-year-round farming.

Source: Dominick Andoh/thebftonline.com/Ghana

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