There is need for a collective effort to build the capacity of industry and businesses in other critical economic areas for the gains of the single continental market to reflect in the economy, Vice-President of the Association of Ghana Industries (AGI) Humphrey Ayim-Darke has indicated.
“Local enterprises do not have the right levels of empowerment; trade imbalances are going against us. To succeed under the AfCFTA, we will need to build the capacity of industry and other critical economic sectors and also address the various barriers to growth,” he told the B&FT in an interview.
The African Continental Free Trade Area (AfCFTA) presents to African businesses a single market of 1.27 billion consumers, enhanced opportunities for joint ventures with foreign companies looking for reliable African partners, and increased business efficiency through tariff liberalisation and removal of non-tariff trade barriers.
The new competition to be introduced by the market is also expected to instigate opportunities for innovation and differentiation of goods and services, as well as value addition on products manufactured within the region, etc.
At a one-day seminar organised by the Afrochampions Initiative in March, the AU’s Commissioner for Trade and Industry, Albert Muchanga, emphasised that the attractive opportunities offered by the AfCFTA equally attract competition – and therefore urged Ghanaian businesses to brace for intense competition as they strive to win market shares in the AfCFTA.
He also emphasised that the single market’s success will be owed largely to the participation of private sector enterprises whose selfless contributions lead to the structural transformation and prosperity of Africa.
Mr. Ayim-Darke, who also commands the SME Sector for the AGI, is therefore concerned about the current low capacity of industries and how they can compete within the AfCFTA – especially with Ghana already being a signatory to the interim EPA.
“We have increased markets but most industries are not well empowered; if we are not careful, we are going to see an influx of goods which affect the capacity of local enterprises to produce and compete,” he indicated.
Given that government is fiscally constrained and in dire need of revenue to manage the economy, Mr. Ayim-Darke was sceptical about what it will mean for it to restrict its sources of revenue to only the Common External Tariff (CET).
He queried: “We are going to remove tariffs on goods and restrict the source of revenue to the Common External Tariff (CET), how can government meet its revenue targets?”
Should government feel frustrated by such an arrangement, he fears that the only option left for it will be resorting to domestic revenue mobilisation—which will ultimately lead to high taxation for businesses.
“To avert such a situation, we expect government to seek support from external donors to help broaden its domestic revenue drive so as to balance the revenue basket of the economy,” he advised.