It is Independence Day again; and the Republic of Ghana is now 64-years old. At every Independence Day celebration, this Paper takes time to re-examine the progress made by the country thus far in various sectors to shape policy formulation; and also to remind leaders of the reality on the ground and where attention should be given in future decision-making.
In this article, we will focus on a new opportunity that has opened up for the country and the continent as a whole – the African Continental Free Trade Area – which commences at a time when Ghana is 64-years old after gaining independence. Our forebears on the continent, particularly Ghana’s first president Dr. Kwame Nkrumah, established what is now called the African Union (AU) with a vision of uniting the continent politically and in trade.
After its establishment in 1963 in Addis Ababa, Ethiopia, as the Organisation of African Unity (OAU), leaders envisioned a time when the continent would form one united force to address its own challenges without looking to external aid for development. And one of the key structures that will see that vision come true is the establishment of a system that promotes free movement of goods and persons across the region.
Finally, that system is here now – the African Continental Free Trade Area (AfCFTA) which came into full force beginning January 2021. The trade pact connects 1.3 billion people across 55 countries with a combined GDP valued at US$3.4trillion. According to the World Bank, AfCFTA will significantly boost African trade – particularly intraregional trade in manufacturing. The volume of total exports is expected to increase by almost 29 percent by 2035 relative to the baseline.
To appreciate the importance of this agreement, it would be prudent to look at what the figures say regarding Africa’s trade within and outside the continent. The UNCTAD data show total trade from Africa to the rest of the world averaged US$760million in current prices for the period 2015-2017, compared with US$481billion from Oceania; US$4.1trillion from Europe; US$5.1trillion from America and US$6.8trillion from Asia.
The share of exports from Africa to the rest of the world, UNCTAD adds, ranges from 80 percent to 90 percent in 2000-2017. However, intra-Africa exports were 16.6 percent of total exports in 2017, compared with 68.1 percent in Europe, 59.4 percent in Asia, 55 percent in America and 7 percent in Oceania.
But intra-African trade, defined as the average of intra-African exports and imports, was around a paltry 2 percent during the period 2015-2017; while comparative figures for America was 47 percent, Asia was 61 percent, Europe was 67 percent, and Oceania was 7 percent.
These statistics underscore the importance of political will in putting together structures and systems to deepen trade within the continent, as this has been touted as the only way Africa can create sustainable jobs and take many people out of poverty.
Intra-Africa exports account for 15 percent of Ghana’s total exports and 11 percent of total imports for 2018. It is therefore appropriate that Ghana, which in 2018 exported and imported goods to and from the rest of Africa to the value of US$2.5billion and US$1.2billion respectively, takes this opportunity seriously.
And coincidentally, the headquarters of the AfCFTA secretariat is located right at the heart of Ghana’s capital, Accra. These and other reasons make a strong case for the country to take full advantage of the trade pact that is expected to change the destiny of the country and continent at large.
Ghana’s preparedness
For such an important step taken by leaders of the continent, there is no doubt that each country is putting in place measures to ensure it doesn’t become a loser in this all-important game.
President Akufo-Addo has reiterated that the country cannot afford to let this opportunity slip, as he has time and again emphasised that his government will do everything possible to resource the private sector to be at the forefront of this agenda.
“We in Ghana cannot afford to let this window of opportunity slip. We hope that the private sector, facilitated and actively supported by government, will be at the forefront of trying to take advantage of the vast possibilities presented by the AfCFTA.
“Let me reiterate my government’s determination to assist Ghanaian businesses take full advantage of the AfCFTA to ensure that the required financial and human resources are mobilised to make Ghana a new manufacturing hub for the African continent,” he said at a trade conference in Accra last year.
The president further emphasised that government programmes such as the One District, One Factory initiative; the development of strategic and anchor industries to diversify the economy beyond dependence on traditional commodities; the Planting for Food and Jobs, which is helping to modernise agriculture to achieve food security and guarantee proper profitability for farmers; and the Planting for Exports and Rural Development programme, which focuses on developing other trade crops as cash crops, are all programmes rolled out to prepare the country for the AfCFTA market.
Other programmes further include the establishment of 67 business resource centres to offer business development services and technology solutions to micro, small and medium businesses across the country; and the development of industrial parks as special economic zones in collaboration with the private sector are all geared toward positioning the country better for the AfCFTA.
Trade Minister-designate, Alan Kwadwo Kyerematen, during his vetting in Parliament also laid out certain plans government has put in place to resource the private sector for the continental market.
“With the coming into force of the African Continental Free Trade Area (AfCFTA), we have established a national office that is currently implementing a national programme of action specifically targetting companies that can produce competitively for the export market, particularly for Africa. These programme interventions are supposed to cover a variety of areas.
“First is enhancing productive capacities; second is ensuring that there is access to affordable credit; the other is also identifying specific market information about opportunities in different countries; and another one relates to ensuring that we provide technical assistance for quality and standards. We are also supporting them in terms of human resource capacity building.
“We have a programme that is targetting companies which are already exporting to Africa to enhance their current level of production. There are others that are not exporting to Africa but exporting to other parts of the world, so we are guiding them to identify opportunities on the African continent,” he said.
A key step in recovering from the pandemic
Government has maintained that the AfCFTA will play a key role in the country’s recovery from the ruins of the coronavirus pandemic, as it is going to create a new opportunity for businesses to expand their frontiers for the new market. And it is especially important at this time, when the economy is recovering from its first-ever recession in 37 years.
The World Bank has underscored this point in a recent report, saying: “A successful implementation of AfCFTA will be crucial. In the short-term, the agreement will help cushion the negative effects of COVID-19 on economic growth by supporting regional trade and value chains through the reduction of trade costs. In the longer-term, AfCFTA will allow countries to anchor expectations by providing a path for integration and growth-enhancing reforms.
“Furthermore, the pandemic has demonstrated the need for increased cooperation among trading partners. By replacing the patchwork of regional agreements, streamlining border procedures, and prioritising trade reforms, AfCFTA can help countries increase their resiliency in the face of future economic shocks,” the World Bank stated in a report titled ‘The African Continental Free Trade Area, Economic and Distributional Effects’.
So, in the 64 years of the country’s history since independence, this year marks the beginning of a new dawn and a new era wherein Ghana and the rest of Africa have opportunities to increase trade relations, which will help in a quick recovery from devastation caused by the pandemic and liberate the continent from endemic poverty.
We wish the country well in this journey.
Long live Ghana!
