The missing middle: Ghana’s booming agriculture isn’t fueling industry — why that is a problem

By Emmanuel Boateng

Ghana’s agricultural sector surged by 6.6percent in the first quarter of 2025, the highest among all sectors, according to the Ghana Statistical Service (GSS). Yet, in sharp contrast, industry grew by only 2.3percent during the same period. This imbalance highlights a troubling structural gap: while Ghana’s farmers are producing more, its factories are not processing or transforming these gains. Economists refer to this as the “missing middle”, a break in the economic value chain that could undermine long-term growth.

In classical development models, economies transition through three stages: agriculture, industry, and then services. But Ghana appears to be skipping the industrial phase, moving from agricultural growth directly into a services-led economy. The implications are serious: missed job opportunities, limited value addition, and vulnerability to commodity price fluctuations. “It’s a structural concern, without agro-industrial linkages, growth becomes fragile, and we miss the chance to create jobs and add value locally.”

According to the latest GSS GDP bulletin, agriculture contributed over GHS10 billion in constant terms in Q1 2025. However, agro-processing, the industrial activity that should naturally follow strong harvests remains underdeveloped. Much of Ghana’s raw cocoa, cassava, tomatoes, and maize are exported or left to perish, while the country imports processed alternatives like tomato paste and cocoa products.

A review of quarterly performance shows agriculture’s resilience driven by crop production and favorable weather, which was likely boosted further by initiatives such as Planting for Food and Jobs Phase 2. But industry, particularly agro-processing, construction, and mining, continues to lag, blunting the broader economic impact.

This matters for several reasons. First, job creation. Industry, particularly light manufacturing, is critical for absorbing surplus labor from the agricultural sector and providing stable employment for Ghana’s growing youth population. Second, value addition. Processing raw materials locally increases earnings, tax revenues, and trade surpluses. Third, economic resilience. A diversified economy with strong agro-industry can better absorb external shocks like price fluctuations in global commodity markets.

The World Bank has long advised that for Ghana to sustain inclusive growth, agriculture must feed not just the people, but also its industries.

So what is holding industry back? There are several bottlenecks. Infrastructure gaps, from poor road networks to erratic electricity supply and insufficient storage, increase production costs for processors. Access to credit is another hurdle. Many agro-processing SMEs struggle to access affordable financing, despite state-sponsored initiatives. Outdated technology and a lack of innovation further constrain production capacity and quality. Additionally, policy fragmentation is a major issue. Programs like PFJ and One District One Factory (1D1F) often operate in silos, lacking the synergy required to build integrated value chains.

Other countries show what is possible when these gaps are closed. Ethiopia has developed agro-industrial parks that integrate farming communities with processing zones. Vietnam successfully transitioned from rice exports to high-value seafood and packaged food production. Morocco built state-supported industrial clusters for agri-food exports, boosting its competitiveness under the African Continental Free Trade Area (AfCFTA). These examples show the power of public-private collaboration and long-term planning in transforming agricultural output into industrial strength.

To unlock the full potential of its agricultural boom, Ghana must act decisively. Establish agro-processing industrial zones with tax and utility incentives for investors. Improve access to affordable credit through public-private blended finance models. Digitize agricultural supply chains to reduce losses and improve market linkages. Moreover, tie PFJ outcomes to off-taker arrangements that ensure harvested crops are linked to processors.

Ghana has fertile land, a growing labor force, and strong agricultural output. However, without the “middle layer” of industry, especially agro-processing, the country risks repeating past cycles of raw material dependency and low-value exports.

Structural transformation requires more than growth numbers; it requires connection. The farm must link to the factory, and the factory to the global market. And until Ghana fixes this missing middle, its full economic promise and potential will remain just out of reach.