- Rather an opportunity for manufacturing sector
Head of the European Union Mission to Ghana, Ambassador Diana Acconcia, has debunked assertions that the coming into force of the interim Economic Partnership Agreement (EPA) with Ghana will undermine the purpose of the African Continental Free Trade Area (AfCFTA), saying, the country’s trade pact with Europe will rather boost the capacity of the manufacturing sector to produce for the continent.
Her conviction is hinged on the fact that the EPA will see Ghana progressively reduce its tariffs to zero for 78 percent of its imports from the EU by 2029, which will significantly affect the removal of tariffs on intermediary goods and machinery from the EU, thereby, ensuring cheaper inputs for the manufacturing sector.
For her, this is a good opportunity for the country’s manufacturing to be competitive as companies seek to take advantage of the new market on the continent. Hence, the two trade deals – EPA and AfCFTA – will place Ghana in pole position to gain from both the continent and Europe.
“Together with the AfCFTA, Ghana is going to be at the centre of two free trade areas. It has free export to the European Union and it has free trade with Africa, so it is a very good opportunity for Ghana’s manufacturing sector.
It is true that the trade volumes from Ghana to Europe are higher compared to trade volumes to Africa. If you look at Ghana’s trade, the only country that trades significantly with Ghana is South Africa, and the export to South Africa from Ghana is predominantly gold, so they are not products that create manufacturing jobs. And you don’t see any African country in the first 10 trading partners of Ghana. But this can change.
At the moment the political priority is to trade with Africa but that will take a little bit of time to get to a more important level because it is not clear yet which products to export to Africa. There has to be a discussion to determine which products are going to be competitive for exports to the rest of Africa,” she told the B&FT in her last interview, as her tenure as Head of Mission expires sometime this month.
The EPA is coming at a time when the country has also signed on to the continental trade pact which is to connects 1.3 billion people across 55 countries with a combined GDP valued at US$3.4 trillion. It is envisioned that AfCFTA would 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. Intracontinental exports would also increase by over 81 percent, while exports to non-African countries would rise by 19 percent.
However, with Ghana as the host of the secretariat for AfCFTA, it is yet unclear how other signatory countries will feel about its commitment to the EPA trade deal, given Europe has always been the country’s largest trading partner, even without the EPA.
But government has given assurance in a joint press release with the EU that it will not relegate the AfCFTA to the background, but leverage opportunities presented by the EPA to help the manufacturing sector take advantage of the new market created by the African Union.
“Government is keenly aware that these benefits from the AfCFTA will not accrue automatically to businesses in Ghana. It will require a comprehensive programme of support for Ghanaian businesses in areas including access to finance, enhancing industrial productive capacity, trade facilitation, trade-related infrastructure and facilitating access to market information.
A number of programme interventions have already been introduced to support companies in the areas listed above. These include the financial stimulus package for local industries being implemented with the support of participating financial institutions; banking sector reforms; One District One Factory (1D1F) initiative; the establishment of industrial parks and special economic zones; SME development; Tema and Takoradi port expansion project; construction and rehabilitation of road networks; railway development; and the introduction of new Trade Facilitation and Customs Management System (ICUMS/UNIPASS).
Government will continue to prioritize support to the private sector and entrepreneurship to create jobs and improve incomes by making Ghana a hub for commerce, financial services, and manufacturing to take full advantage of the AfCFTA,” the press release stated.