An expert in business law and lecturer at the University of Professional Studies-Accra, Lawyer Godwin Adagewine, has urged government to support local businesses build their capacity to produce so Ghana can benefit from the Continental Free Trade Agreement.
Last Wednesday, 44 African leaders – including President Akufo-Addo – agreed to form a US$3trillion continental free trade zone with the goal of providing easy and free movement of persons, goods and services.
The draft agreement commits countries to removing tariffs on 90 percent of goods, with 10 percent of “sensitive items” to be phased in later.
But Lawyer Adagewine argues that all the countries which have signed differ in economic strength, and it is only the countries with high productive capacities and are able to export that will benefit from the agreement.
“One of the biggest problems that faces African countries is that they do not trade among themselves because of the barriers. So, the theory is that when those barriers are dismantled and people can move freely to conduct business activities, then we can maximise our economic activities and thereby push our economic development higher.
“But it’s those countries which have something to export that are likely to benefit from this agreement. So, it [the trade bloc] is providing access to market; and if you can easily access the available market to sell your products, then you are in a very good position to derive maximum benefit from the agreement,” he said.
Mr. Adagewine is therefore urging government to provide the needed support that will build the capacities of the private sector and also encourage them to produce more so Ghana will not be on the losing side – adding that government can do this by eradicating corruption in public institutions which regulate business activities.
“The free trade agreement will not, by itself, drop monies from heaven; but it provides an opportunity. And you can only take that opportunity if you build your productive capacity. It now depends on governments of various countries to support the economic sectors.
“In Ghana, for example, we have the One District, One Factory programme, and an over-riding policy of private sector-driven economic development. What this means is that government should build the capacity of the private sector to produce, so it can take advantage of the free trade arrangement.
One way in which government can help to do this is minimise, if not eradicate, the corruption in public bodies that regulate business activities. For example, if you want to register a business entity, how long should it take you and how much should it cost you?
These things government can do. So, once these constraints are taken away, the private sector will be energised to produce,” he said.
The Free Trade Agreement
Even though the Continental Free Trade Agreement is expected to provide the aforementioned benefits, the two biggest economies on the continent, Nigeria and South Africa, did not sign the agreement.
It is unclear why Nigeria stayed on the sidelines, but the President of South Africa, Cyril Ramaphosa, explained that his country will be ready to sign once the necessary legal and other instruments associated with it are processed and ratified by South African stakeholders and parliament.
Other countries also staying out of the bloc are Botswana, Lesotho, Namibia, Zambia, Burundi, Eritrea, Benin, Sierra Leone and Guinea Bissau.