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Ghanaian companies, small, medium or large, have greeted the New Year with great expectations.
Many had collapsed, while others were born from the limitations and opportunities of the coronavirus pandemic.
But the year 2021 has its commercial and enormous potential, as Ghana and the rest of the continent begin the journey towards the world’s largest single market agreement under the African Continental Free Trade Agreement Area (AfCFTA).
The World Bank estimates that this agreement will create the largest free trade area in the world measured by the number of participating countries. The pact connects 1.3 billion people in 55 countries with a combined gross domestic product (GDP) valued at $ 3.4 trillion.
Ghana SMEs and AfCFTA
Even before Ghana won the tender to host the Single Market Agreement Secretariat, the government had introduced aggressive reforms and business regulations to ease the cost of doing business and also attract young entrepreneurs and angel investors to the country’s burgeoning market.
Business registration times have been drastically shortened, annoying taxes have been exempted, SME support and stimulus packages have been provided, the technology infrastructure has been established to help businesses migrate and stay sustainable in the digital space : so many interventions.
The Ghana Industries Association (AGI) has already called this new era of African trade “the game changer” for industrial growth and opportunity.
Executive Director Seth Twum Akwaboah, in an interaction with me on the Market Place business program, said, “This is a golden opportunity for Ghana’s industries to take over and be more productive and influential. This trade market of US $ 3.4 trillion will be a game changer for Ghanaian companies, especially as we house the secretariat. “
Until now, all SMEs and start-ups in Ghana and throughout the African subregion have been considered in a policy to facilitate the smooth completion of the African Continental Free Trade Agreement (AFCTA).
There have been concerns that small businesses could be left out of the deal, especially in Ghana, where 70 to 80 percent of them face credit challenges. But the United Nations Economic Commission for Africa (UNECA), Coordinator of the African Center for Trade Policy, David Luke, told Joy Business that a special arrangement has been drawn up to address this problem.
According to him, “the agreement itself provides for the protection of infant industries, startups and SMEs and they are excluded from subsidies and that type of government support, but clearly, most of the support comes from national sources.”
Diversification of Ghana’s agriculture
Meanwhile, UNECA Senior Policy Advisor Dr. Joseph Atta-Mensah has called for the “need for Ghana to shift from being a supplier of raw materials to becoming a supplier of finished products. We have to focus on agribusiness to get the most out of this deal. Especially in the cocoa sector, it is necessary to consider multidimensionality. We have a great demand for chocolates all over the world, especially in the African markets. “
Investment Driven Reforms
Former UK Cabinet Minister Paul Yaw Boateng in a Zoom interaction with me said that the success of the Continental Free Trade Agreement Area will be based on reforms and strategies that will make the continent attractive to investors.
Paul Yaw Boateng explained that while the threats from the Coronavirus could be challenging, content must seize the opportunities that come with regional integration.
“Yes, the pandemic is a crisis, the world is in recession. But it creates a unique opportunity especially for SMEs. So we have to make sure that there is an initial capital for them, a transparent and reliable regulatory environment that facilitates entrepreneurship and facilitates investment, “he said.
The emergence of a burgeoning business space calls into question Africa’s readiness to help SMEs expand to face global competition. There are already concerns about the high cost of loans. Ebenezer Onyeagwu is the CEO and CEO of Zenith Bank PLC.
“At the moment we have the free trade zone, I hope they will draw up a framework that should guide several countries in the institutional support to give flesh and blood to SMEs. We need to see it as a completely African project to achieve an economy of scale ”.
Unfinished business on rules of origin
Industry players, particularly the international trade community, have insisted that education on the application of trade barriers under the agreement, as specified in the AfCFTA Rules of Origin in the area of duty-free trade, will determine the eligibility or not of the goods to be traded – it has not been done adequately enough to allow the trading community to be aware of the relevant principles of the impending deal.
Although the implementation of some operational aspects of the African Continental Free Trade Area (AfCFTA) has been temporarily suspended, the agreement would be a very important element to support the post-pandemic recovery and promote medium-term economic growth in Sub-Saharan Africa. by creating broader and more integrated markets and promoting intracontinental trade.
Importantly, the implementation of the AfCFTA will also reduce uncertainty about trade relations within the continent, which, together with an expanded and more integrated market, would encourage domestic and foreign direct investment and help boost economic activity as the countries emerge from the pandemic.
Prospects for intra-African growth
The International Monetary Fund in its Staff Discussion Notes published on May 13, 2020 projects that, although the implementation of some operational aspects of the African Continental Free Trade Area (AfCFTA) has been temporarily suspended, the agreement would be a very important element. support post-pandemic recovery and foster medium-term economic growth in sub-Saharan Africa by creating larger and more integrated markets and promoting intracontinental trade.
Importantly, the implementation of the AfCFTA will also reduce uncertainty about trade relations within the continent, which, together with an expanded and more integrated market, would encourage domestic and foreign direct investment and help drive economic activity as the countries emerge from the pandemic.
For the Secretary General of the AfCFTA, 2021 marks a new milestone in the economic history of Africa’s commercial eco-space.
“Today, we are not only celebrating the beginning of a new year, but today we are giving Africa a new beginning, with the start of trade as a free trade area under the AfCFTA,” he said.
By Charles Ayitey
