Small and medium scale enterprises (SMEs) have been urged to take advantage of the African Continental Free Trade Area (AfCFTA) by seizing external market opportunities.
This, according to panellists at the recent 12th Ghana Economic Forum organised by the B&FT, will help boost local production and reduce overdependence on imports, as well as help the country’s economy to bounce back.
Speaking during a plenary session on the topic ‘Looming global recession? A myth or an awakening reality considering present challenges facing the financial sector and the business environment’, the panellists took turns to share ways that SMEs and government can benefit from the AfCFTA initiative.
Lecturer at the Department of Economics, University of Ghana, Dr. Priscilla Twumasi Baffour intimated it is ironic that for a tropical continent Africa is remains a major hub for food imports.
“The issue is why are initiatives such as industrialisation drives in different African countries not working? Let’s look at the market size of these giant economies. Let’s look at the market size of the US; Ghana cannot fight with the United States. So, the only way is for us to unionise.
“Perhaps this is where the AfCFTA is a good initiative for us to get away from the problem of fragmentation. If we are looking at an African scene, then we will be moving into markets where companies will be dealing with a billion and a half people on the continent. That opens up opportunities for innovation, opportunities for expansion and economies of scale,” she said.
While advocating the removal of barriers that hinder the free flow of goods and services among African countries, like lack of a common currency, she specifically lamented the over-US$3billion worth of fruit juices imported into Africa annually.
“In the case of fruit juices for example, why are companies not focusing on expansion and exporting within the African zone? The reality is that there are so many barriers which are making products expensive and uncompetitive. Yes, we need foreign investments; those are good for improving the deficiencies we have; but the reality is that local capacity is always the best,” Dr. Twumasi Baffour further noted.
Explaining further, she warned that until African countries – for example, under the AfCFTA – come to a common agreement in terms of a medium of exchange for goods and services, the continent’s economies will remain vulnerable to external shocks.
As regards how Africa can drive down the cost of funding to drive its economy, Andrew Akoto, Partner and Head Advisory, KPMG, underscored the importance of intentionally creating off-take outlets for value-added locally-made products.
“As a nation or as a region, we are blessed. We have a very wide expanse of arable land and governments must pay attention to what the SMEs community’s needs are. But it is not enough to increase our production capacity; we must also ensure that there is a market for products. If the ordinary entrepreneur produces something and there is no off-taker, they will stop,” he added.
Adding her voice to the call to leverage the AfCFTA, Kate Djankwei Abbeo, Deputy Chief Executive Officer of the Ghana Free Zones Authority (GFZA) noted: “We should know who our private sector players are. Research indicates that SMEs constitute over 90 percent of private sector players. We need to really engage them and know their needs. For some, they may not require funding; they need access to markets and others.
“We have all signed the African Continental Free Trade Agreement, and it is headquartered here. How are we taking advantage of this market access? We need to leverage this position by engaging our SMEs,” she further said.