- Urges them to embrace joint ventures
Small and medium-scale enterprises (SMEs) producing similar products in the country have been urged to form joint ventures, in order to increase their production capacity and better position themselves to take advantage of opportunities in the Africa Continental Free Trade Area (AfCFTA) agreement.
International Trade Law Consultant, Maame Awinador-Kanyirige, stated that collaboration and mergers will build synergy and grant SMEs better bargaining power to enter into the foreign markets rather than competition among themselves, as parties to the agreement can leverage their production at a lower unit cost than they could separately.
She further outlined four main strategies for playing in the international market – namely export, standardisation, transnational and multi-domestic strategy; and advised SMEs to focus more on the export model as it is cheaper and has proven to be successful for some companies in the country.
“Fundamentally, the cheapest model is the export strategy whereby you produce locally, gain momentum and begin to export…I think SMEs will benefit a lot more from the export strategy model, whereby you are operating from your local country, focusing on developing a good response from the market, and try to integrate into the foreign market by exporting your produce.
“And so, what happens is that you have gained trust locally; it therefore sends a goodwill message about your product to the outside market, so it costs less compared to the other models wherein a company would have to establish offices and operation facilities in other countries or change the product outlook,” she said.
Chief Executive Officer-Blackbridge Consulting Group (BCG), William D. Nartey, bemoaned the fact that 50-70 percent of companies in the country do not take seriously the issue of compliance with regulatory structures governing business operations, advising them to change that narrative as that is one of the key features foreign businesses seeking to partner any company looks out for.
“To get businesses ready, we need to look at our regulatory structures here in the country for businesses; because if you are going to deal with businesses that are outside our jurisdiction, they want to make sure that, at least, in your own home you have things in order. Likewise, Ghanaian firms must also ensure those foreign companies are compliant with their domestic laws, because there is a risk element in doing businesses with a company that is prone to legal challenges,” he said.
He stressed that Blackbridge Consulting wants to ensure that businesses, in terms of company structures, are ready with the right people in the right positions before tapping into the AfCFTA market, as it would boost their confidence knowing their house is in order.
Mr. Nartey also emphasised that under the AfCFTA private parties do not have a say when it comes to dispute resolution; only state parties have access to dispute settlement, and private parties will only be protected if a state party is able to show that their rights have been violated. Therefore, private entities must form associations to have a strong voice that is able to push the state into addressing their grievances.