The Business Climate Report has urged the country to change its old practice of exporting primary products to the United Kingdom (UK), which has persistently resulted in a negative trade balance at the country’s expense.
The 2020 report indicated that the UK imported US$242million worth of goods, while Ghana on the other hand imported US$473million worth of goods from the UK – presenting a negative trade balance of about US$231million.
This, the report said, is attributed to factors such as the country’s continuous export of raw materials and import of manufactured goods, coupled with a drop in the level of exports against imports in trade with the UK – a trend that may continue for a long time if nothing concrete is done to change the narrative.
“The goods traded between the two countries have not changed substantially over the period. Ghana’s exports to the UK remain largely primary products, while imports from the UK have mainly been manufactured goods. This accounts for the negative trade balance to the disadvantage of Ghana. Our forecasts show that this trend is likely to continue into the near future,” the report stated.
Top-five exports from Ghana to UK, which are mostly in their raw state, remain as follows: mineral fuels, oils, and distillation products; meat, fish and seafood preparations; cocoa and cocoa preparations; edible fruit, nuts, peel of citrus fruit, melons; and edible vegetables and certain roots and tubers.
On the other hand, top-five imports to Ghana from UK are: wood and articles of wood, wood charcoal; nuclear reactors, boilers, machinery; articles of iron or steel; plastics and articles thereof; and vehicles other than railway, tramway.
AfCFTA offers door of opportunity
The report further projects that leveraging the Africa Continental Free Trade Area (AfCFTA) agreement could be a game-changer for the country to correct the difference of trade, as it creates a single continental market for goods and services – enabling free movement of businesses, persons and investment on the back of reduced tariffs and trade barriers.
“It is established that there can be better prosperity if Africans trade more among themselves by leveraging AfCFTA. However, merely implementing a free trade agreement will not necessarily translate into better outcomes unless certain critical issues are addressed.
“There should be continued dialogues between government, businesses and other stakeholders to understand their needs and better formulate policies conducive to business expansion and competition,” the report stated.
Data from the United Nations Commission for Trade and Development puts intra-African trade at a measly 15 percent, which is estimated to be boosted under AfCFTA to 52.3 percent – which is still less than the 67 percent of Europe.