Some neglected issues in the economic analysis of agricultural project management in Ghana

Abstract

The Agricultural Development Bank (ADB) is an important financial organisation and is the main source of credit for agricultural projects in Ghana. The purpose of this study is to examine the procedures and method of analysis in project planning and management adopted by the ADB with the main object of identifying some of the neglected issues and to suggest some methods for improvement. Agricultural project planning and management by the ADB have been found to be plagued by a number of problems and inefficiencies in the areas of identification and selection, formulation, approval, implementation, supervision, monitoring and control. These areas are systematically examined and the main problems and bottlenecks are identified. An examination of the current state of project appraisal methodology is undertaken. The main project appraisal procedures are also reviewed, bringing out the difficulties of economic costbenefit analysis and offering a critique of the appraisal procedures. Suggestions for improving project identification and selection, formulation, implementation and supervision in the ADB are made based on the writer's insights into and experiences of the various problems identified with the production process. Cues are also taken from recommendations made for developing countries by such organisations as the FAO, IBRD and USAID. The major contribution of the study is the use of probability appraisal to analyse risk in a maize and pineapple project financed by the ADB. The Monte Carlo Simulation technique is adapted for use in this analysis. Results from this technique are compared with original results of the same projects obtained by the use of conventional cost-benefit analysis where single value estimations of costs and prices are made. Results from the probability analysis indicate that the methodology enables us to provide management with more appropriate information for making the right decisions by recognising the variability of outcomes of projects in the face of risk and uncertainty. Mean values of three indicators of worthiness obtained under this technique arc also thought to be more reliable and acceptable, especially since we do not have to fear any large variations around these values. Limitations of the analysis and directions for future research are indicated.