Industrialisation Continues to Suffer from Insufficient ABFA Allocation, PIAC Reports

Despite being designated as a priority sector for oil revenue investment over the past six years, industrialisation in Ghana remains severely underfunded, according to the latest report from the Public Interest and Accountability Committee (PIAC).

This lack of funding is particularly striking given the government’s focus on industrialisation as a core pillar of its economic policy, with flagship initiatives such as One District, One Factory (1D1F) and One Village, One Dam (1V1D) aimed at boosting local industries and infrastructure. However, a significant gap between policy goals and actual funding allocations continues to hinder the sector’s growth.

The ABFA, or Annual Budget Funding Amount, which is derived from the country’s oil revenues and allocated for development projects, has allocated very little to industrialisation. Between 2020 and 2022, out of a total of GH₵9.04 billion allocated for four key priority areas, just GH₵57.35 million was directed towards industrialisation.

In stark contrast, other sectors such as agriculture received GH₵184.21 million, while infrastructure for education, health, and physical services was allocated GH₵2.3 billion. The roads, rail, and critical infrastructure sector received the largest share with GH₵5.37 billion.

The situation remained largely unchanged in 2023, when industrialisation was allocated only GH₵2.35 million out of a total GH₵3.3 billion for priority areas. The PIAC’s recent report also revealed that there was no ABFA allocation for industrialisation in the first half of 2024, continuing a troubling trend of underinvestment in the sector.

The PIAC has expressed concerns over this lack of funding, urging the Ministry of Finance to demonstrate its commitment to prioritising industrialisation by ensuring consistent and adequate disbursements from the ABFA. The committee emphasized the need for greater investment to support job creation, particularly for the youth, and to ensure that the country’s industrial sector can thrive.

Meanwhile, the roads, rail, and critical infrastructure sector continues to receive the lion’s share of ABFA funding. In the first half of 2024 alone, this sector received GH₵2.12 billion—70.04% of the total ABFA allocation for the period.

The Petroleum Revenue Management Act (PRMA) stipulates that priority areas for oil revenue investment should be reviewed every three years. The current priorities, which span from 2022 to 2025, are set to be reviewed next year. PIAC has urged that the review process be thorough, taking into account the sector’s development needs, the country’s absorptive capacity, and the importance of maintaining macroeconomic stability.

Looking ahead, the PIAC stresses that industrialisation must receive more funding in order to achieve the growth and job creation goals set out in the country’s development agenda.