Ghana’s Development Challenge: We Produce, But We Don’t Add Enough Value

Ghana is richly endowed with natural and agricultural resources. From cocoa, cashew, gold, and bauxite to oil, shea, timber, mangoes, and tomatoes, the country has many of the raw materials needed to build a strong industrial economy.

Yet despite this abundance, unemployment remains a major challenge, many communities struggle with poverty, and the economy continues to be vulnerable to fluctuations in global commodity prices.

One important reason is that Ghana continues to export too much of what it produces in raw or minimally processed form while importing higher-value finished products.

We export cocoa and import chocolates and other confectionery. We produce cashew but export much of it without capturing the full value of processing, packaging and branding. We mine gold but import large quantities of jewellery. Farmers produce tomatoes in abundance during the harvesting season, yet significant quantities can go to waste because of inadequate storage and processing capacity while the country continues to import tomato paste.

This economic structure transfers jobs, technology and profits elsewhere.

When a country exports primarily raw commodities, it often has limited influence over international prices. Farmers and primary producers receive only part of the value ultimately generated from their products, while processors, manufacturers, distributors and brand owners capture much more further along the value chain.

Cocoa illustrates the problem clearly. Ghana is one of the world's leading cocoa producers, but much of the value in the global chocolate industry is generated beyond the farm gate through grinding, processing, manufacturing, packaging, branding, distribution and retail.

The question Ghana must therefore ask is not simply how many tonnes of cocoa it produces, but how much value it captures from every tonne.

The same principle applies to cashew, shea, timber, bauxite, gold, oil and agricultural produce. Economic transformation cannot be measured only by how much we harvest, mine or export. It must also be measured by how much we process and manufacture locally.

Agriculture, for instance, must increasingly be treated as an industrial value chain rather than simply a farming activity. Production should be connected to warehousing, cold storage, grading, processing, packaging, transportation, marketing and exports.

A mango should not only be seen as a fruit harvested from a farm. It can become juice, concentrate, dried fruit, puree, flavouring and other industrial ingredients. Shea nuts can become butter, creams, soaps and cosmetics. Cocoa can become liquor, butter, powder, beverages and confectionery. Cassava can become industrial starch, flour, ethanol, glucose and other products.

Every additional stage creates opportunities for employment, entrepreneurship, technology transfer and export earnings.

But value addition will remain difficult if Ghana does not address the cost of manufacturing. Entrepreneurs seeking to establish processing businesses face expensive financing, energy and logistics costs, infrastructure constraints and competition from imported finished products.

Factories cannot be built sustainably on prohibitively expensive long-term credit. Industrialisation requires financing arrangements that recognise that manufacturing investments often take years to generate returns.

Ghana must therefore develop stronger financing mechanisms for agro-processing and manufacturing, particularly for small and medium-sized enterprises. Development finance institutions, commercial banks, government programmes and private investors must find practical ways of providing patient capital for productive businesses.

Infrastructure is equally important. Processing facilities must be located close enough to production areas and supported by reliable electricity, water, roads, storage facilities and transportation networks.

The country also needs to rethink skills development. Young people should not only be encouraged to enter agriculture; they should be trained to operate processing equipment, develop products, manage quality systems, design packaging, build brands and meet international export standards.

The employment opportunity is not only on the farm. Much of the greater opportunity is after the farm.

Ghana does not necessarily need to prohibit the export of every raw commodity overnight. Such an approach could disrupt existing markets and livelihoods. Instead, the country should establish realistic and progressively increasing local-processing targets, backed by incentives, infrastructure and access to finance.

Government industrialisation programmes should consequently be judged not merely by the number of factories announced or commissioned, but by measurable outcomes: How much agricultural produce is being processed locally? How many manufacturing jobs have been created? How much of Ghana's exports consist of finished or semi-finished products? How much foreign exchange is being earned from Ghanaian brands?

Countries that have successfully transformed commodity sectors demonstrate the importance of moving further along the value chain. Vietnam built major processing and export industries around agricultural commodities, including coffee and cashew. Botswana pursued greater participation in the diamond value chain. Other economies have similarly demonstrated that natural resources become far more powerful development tools when connected to domestic enterprise, skills and industry.

Ghana already has initiatives aimed at industrialisation, including the 24-Hour Economy agenda, industrial parks and earlier programmes such as One District One Factory. Whatever political administration introduces them, such initiatives should ultimately be evaluated by their ability to increase productivity, processing, exports and sustainable employment.

The private sector also has a responsibility. Ghanaian entrepreneurship cannot remain dominated by buying and selling imported finished goods. More capital must move into manufacturing, processing, packaging and export-oriented businesses.

Consumers have a role as well. Local industries cannot grow if Ghanaian products are automatically regarded as inferior simply because they are locally manufactured. Producers must improve quality and consistency, but consumers, institutions and government procurement systems should also give competitive Ghanaian products a fair opportunity.

Ghana's challenge is therefore not that the country lacks resources. It is that we have historically captured too little value from many of the resources we possess.

Producing more cocoa without expanding chocolate and cocoa-processing industries will take us only so far. Growing more tomatoes without processing facilities will continue to produce seasonal gluts and losses. Mining more minerals without developing downstream industries will continue to surrender significant economic opportunities.

The next stage of Ghana's development must therefore be about transformation.

We must move from cocoa to chocolate, cashew to packaged foods, shea nuts to cosmetics, fruits to juices and concentrates, cassava to industrial starch, timber to finished furniture, and minerals to higher-value industrial products.

We will not industrialise simply by producing more.

We will industrialise by transforming more of what we produce into products the world is willing to buy at a premium.

That is how Ghana can create jobs, expand exports, strengthen the cedi, increase incomes and build a more resilient economy.

Our resources have always had value. The task now is to ensure that much more of that value remains in Ghana. And

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