The implications of hosting AfCFTA secretariat

The African Union’s decision to elect Ghana to host the Secretariat of the African Continental (AfCFTA) Free Trade Area is both timely and potentially costly.

The core mandate of the Secretariat will be to implement the African Continental Free Trade Area Agreement, which has since been ratified by 25 member states.

The AU leadership arrived at the decision during the 12th AU Extraordinary Summit held in Niamey, the capital of Niger, on July 7. Had Egypt, Senegal and Ethiopia sustained their interest to the end, Ghana might probably not have had it easy. Thankfully, the three heavyweights stepped down in favour of Ghana.

Small wonder, then, that President Akufo-Addo expressed his gratitude to President Macky Sall of Senegal for stepping-down Senegal’s candidature in favour of Ghana. He also showed gratitude to the leaders of Egypt and Ethiopia – Abdel Fattah el-Sisi and Abiy Ahmed respectively – for similar gestures of solidarity.

Overall, President Akufo-Addo thanked the AU Assembly for affirming Ghana, stating that: “It is a privilege that for the first time in our nation’s history, we have the responsibility of hosting an important pan-African institution.

“I am determined to do whatever I can to guarantee the smooth take-off of the Secretariat and help make sure that it turns out to be a world-class institution that will become the pride and joy of all Africans,” he said.

In furtherance of the success of AfCFTA, he pledged US$10million to the African Union to support operationalisation of the Secretariat.

Most importantly, he urged other pan-African institutions such as the UN Economic Commission for Africa, the African Development Bank, the African Export-Import Bank and other key stakeholders to provide the needed support toward the Secretariat’s establishment.

In addition, and pursuant to the Statutes of the AU Commission, he indicated that the Secretariat will enjoy the privileges and immunities stipulated in the OAU General Convention on Privileges and Immunities, the Vienna Convention on Diplomatic Privileges and Immunities, and the Vienna Convention on the Law of Treaties and the Vienna Convention between States and International Organisations or between International Organisations.

 

Genesis

On 21st March 2018, 44 Heads of State and governments of the African Union (AU), including Ghana, signed an agreement in Kigali, Rwanda, to establish the African Continental Free Trade Area (AfCFTA).

Additionally, 45 members signed the Protocol Establishing the African Economic Community―Free Movement of Persons and Right of Residence; while 43 member-states signed the Kigali Declaration. AfCFTA is the culmination of a vision that was set forth nearly 40 years ago in the Lagos Plan of Action, adopted by Heads of State in 1980. That undertaking led directly to the Abuja Treaty, establishing the African Economic Community in 1991.

It is estimated that AfCFTA is now the world’s largest free trade area since formation of the World Trade Organisation, with a potential market cover of 1.2 billion people, and a combined gross domestic product (GDP) of US$2.5trillion, involving fifty-four (54) member-states of the African Union.

Additionally, it is projected that the signing and implementation of the treaty on the AfCFTA will result in an increase of intra-African trade by 52 percent by 2022, culminating in substantial improvements in the lives of African people.

As President Akufo-Addo noted: “We owe it to generations unborn to ensure that the biggest trading bloc on the globe, whose outcomes will be rewarding to all and which will assist in attaining the ‘Africa We Want’, does not falter”.

Why Ghana?

Ghana stands tall when African independence and pan-Africanism is discussed. The contributions of Ghana toward African integration and pan-Africanism cannot be quantified. That Kwame Nkrumah linked Ghana’s independence to the total liberation of Africa was not empty words after all. Sadly, despite the huge human and financial investments Ghana made in the fight for African independence, not a single institution or agency of the AU had been located in Ghana prior to July 7th, when the landmark decision was made by the AU General Assembly to make Ghana host of the AfCFTA Secretariat.

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Economic and political stability

Undoubtedly, Ghana is among the most stable and secure countries on the planet. The recent Global Peace Index, and several recent economic ratings, affirmed the economic, social and political stability Ghana enjoys in Africa. Ghana boasts of being the gateway to the African Continent, and many refer to the country as a model to many countries around the world.

Politically, over the last two and half decades, Ghana has enjoyed increasingly stable and deepening democratic governance. Under the 1992 Constitution, seven successful elections and transitions have strengthened the effectiveness of key national institutions – Parliament and the Judiciary.

Ghana has one of the best judicial systems in the world measured by rule of law – World Justice Projects (WJP) Rule of Law Index 2017-2018. And it is the 5th most-peaceful country in Africa, according to Global Peace Index 2018.  The Mo Ibrahim Index of African Governance (IIAG 2018) ranks Ghana as number six overall in Africa for governance, number five in Africa for Human development, and number six for Safety and Rule of Law. The recent signing of the Freedom of Information bill into an Act (law) further launches Ghana as one of Africa’s open countries which nurture freedom of expression and thought.

Economically, Ghana is among the top-ten leading economies in Africa, the second biggest in West Africa, and the most favourable destination for investments and tourism in West Africa. Arguably, Ghana is not only the best place for doing business in West Africa, but the fastest growing economy in the world, according to the World Bank’s Ease of Doing Business Report 2019 and IMF projections.

Within this short space of change in power, the country has developed into an established business destination for investors seeking a conducive business environment, committed government-private sector participation, political stability, transparent regulations, and a dynamic private sector ready for partnerships.

That is not all. According to T Kearney Global Services Location Index (GSLI) 2017, Ghana is the best destination in sub-Saharan Africa for doing business, the second FDI destination in West Africa and the seventh in Africa. Similarly, the World Economic Forum Global Competitiveness Index 2018 ranked Ghana as the most competitive economy in the West African sub-region and tenth in sub-Saharan Africa. It is also the most resilient economy in West Africa (African Attractiveness Index 2018). Ranked the second-largest cocoa producer in the world, Ghana is also Africa’s biggest gold miner according to the latest report – unseating South Africa.

Diplomatically, as one of the most peaceful countries in the world (3rd in Africa) with respect for diversity and human rights, Ghana has developed very good and friendly relations with its neighbours and with all other African countries over the years. Ghana Ranks as the 7th most Open Country according to the Visa Openness Index 2018 – for offering either free visa or visa on arrival to citizens of all African countries.

The significance of these statistics is that the AfCFTA Secretariat requires openness and receptibility, as well as commitment to steering it toward the goal of delivering the free trade area. Any concept of African unity usually sends shivers down spines in the west. So, our leaders ought to look out for diversionary tactics by external stakeholders who may not necessarily mean well for a common African market.

Nigeria’s signing

That is why Nigeria’s signing of the agreement is very significant. And President Akufo-Addo could not hide his joy over the commitment of Nigeria to the AfCFTA cause. He stressed that: “The adherence of Nigeria to the Free Trade Area has considerably enhanced its prospects of success.”

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In my view, Nigeria is the proverbial ‘African elephant’, which can decide to move or not to move. Quite often in international diplomacy, Nigeria’s decision not to move (for instance in the case of the Economic Partnership Agreements {EPAs}) helped Africa to enhance its bargaining power with EU members. On the local front, however, Nigeria’s unwillingness to fully comply with the Ecowas treaty on free movement of goods, people and services has in a way held back the economic integration of Ecowas. The letter and spirit behind the Ecowas treaty was that its success would be replicated in other blocs, leading to the eventual integration of Africa’s economy.

Implications for Ghana

As stated earlier, this is the first pan-African institution to be hosted in Ghana, despite its pioneering role in the independence and unification struggle. That said, Ghana should not only be the host, but also position itself to fully benefit from the AfCFTA. One consequence of hosting AfCFTA is that it could further open Ghana’s industrial sector to competition from other African companies.

This calls for a purposeful and intentional plan by government to refinance and retool Ghana’s industries to stand up to foreign competition. Members of the Association of Ghana Industries should gear-up and accept potential competition, rather than the age-old posture of seeking government protection from unbridled competition.

The AGI members should look for partnerships and joint ventures with other industries in Africa which have a comparative advantage. Government, on the other hand, should strengthen the Ghana Exim Bank, the National Investment Bank, and the Agricultural Development Bank to support local producers in exploring the export potential that comes with AfCFTA.

Another implication of hosting AfCFTA is our weak infrastructure. It takes just one hour of rain in Accra to expose our weak road network and poor drainage and sanitation system. Whether we like it or not, AfCFTA will bring heavy traffic to Ghana; and this makes a strong case for government to invest heavily in road and drainage rehabilitation. Unless we collectively make Accra and other cities clean and flood-free, the international community will soon laugh at us; as Ghana will come into the eye of the international media.

The corollary to this is the need to improve road, rail and air transport. There’s a lot of investment going on in the rail sector to improve transportation between Ghana and the landlocked countries. An improvement in the rail sector will ease the pressure on road transport, which for ages has been the dominant means of transportation. The year on year increases in road traffic accidents with huge human and economic losses remain a nagging headache that needs to be fixed.

Perhaps it was prudent that government started dialogue to set up a national carrier. In the wake of Ghana hosting AfCFTA, the timing for the national airline is spot-on. Certainly, Ghana will become the aviation hub of Africa, as AfCFTA will increase air traffic. For Africa’s economy to be fully integrated, our transport system should be integrated first. Vice President Mahamudu Bawumia recently lamented that there is no direct flight among West African countries, let alone Africa as a whole. This is the challenge AfCFTA faces. Good luck Ghana.

 

 

 

 

References

Offei, D., (2019) The African Continental Free Trade Area (afcfta): Why Ghana Was Selected to Host the Secretariat. Modern Ghana. Available (https://www.modernghana.com/news/944155/the-african-continental-free-trade-area-afcfta-why-ghana.html).

Yeboah, R. M., (2019) Ghana Chosen to Host African Continental Free Trade Area Secretariat. All Africa.com. Available (https://allafrica.com/stories/201907080625.html)

 

(***The writer is a Development and Communications management Specialist, and a Social Justice Advocate. All views expressed in this article are my personal views and do not represent those of any organisation(s). (Email: Mobiles: 0202642504/ 0243327586/0264327586)

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