Economic recovery from the COVID-19 pandemic could be quicken if the African Continental Free Trade Area (AfCFTA) can be successfully implemented, Governor of the Bank of Ghana, Dr. Ernest Addison, has said.
Just like the rest of the world, the Coronavirus pandemic has led to a contraction in economic growth in Ghana and across the continent – but Dr. Addison is confident that the AfCFTA, the biggest free trade area in the world that is expected to take off at the beginning of 2021, if implemented successfully could speed up the pace of recovery for Ghana and the continent’s economies.
“Given the exigencies of the time, underscored by the devastating impact of COVID-19 on Africa’s growth prospects, successful implementation of the AfCFTA could be the timely intervention needed to support recovery processes,” he said.
Dr. Addison spoke in Accra at the 9th Association of Ghana Industries (AGI) Quality and Industry Awards themed ‘Building resilience and local capacity toward AfCFTA’.
“It has the potential to raise productivity levels, promote higher investments, improve income levels and reduce poverty on the continent,” he added.
On what AfCFTA means for the country, Dr. Addison said Ghana’s hosting the secretariat provides added benefits, and that collectively “We should start thinking of repositioning our industries within the broader context of the framework”.
To him, local businesses must strategically design business models with the capacity to compete with their peers from elsewhere in order to be able to reap full benefits from the free market area, while emphasis is placed on education and skills development so as to train people with the requisite skills needed for the expected increase in economic activities.
“Building resilience and local capacity to attain full benefits means building domestic supply capacity that is resilient enough to compete in the African market and beyond. More importantly, businesses need to be innovative, understand the regional value chain framework, adapt to technological advances and pursue aggressive marketing techniques.
“Local capacity building must be a crucial and solid foundation for businesses to benefit from the AfCFTA. Businesses must address current needs and identify the gaps required to develop industries that are resilient and competitive,” he said.
Laying the right foundation for businesses to take advantage of AfCFTA
According to him, building resilience within the context of AfCFTA requires a stable microeconomic environment, which he said has been the focus of the central bank and government.
Although the pandemic shock has thrown most microeconomic targets out of reach, he said recent indicators point to a gradual turnaround due to a supporting policy environment and the easing of restrictions, as well as complementary monetary policies implemented by the BoG to support government’s economic recovery plan.
He also touted the recent recapitalisation exercise as having created a well-recapitalised and liquid banking sector that can take advantage of big-ticket financing and investment opportunities. The banking sector, he added, is now well-positioned to support businesses in taking advantage of the free trade agreement.
Among other things, he said, Ghana has also a strong payment and settlement infrastructure supported by a strong legal and regulatory framework which can be leveraged to support regional financing activities.