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Business news for Friday, October 9, 2020
Source: Business 24
2020-10-09
Welcome Mene, First Secretary General of the AfCFTA
An assessment by the United Nations Economic Commission for Africa (ECA) on the expected impact of liberalizing trade in goods under the African Continental Free Trade Area (AfCFTA) treaty shows significant economic benefits for the continent, with great potential to promote industrialization.
According to the assessment, AfCFTA modalities on trade in goods will lead to an increase in the GDP of all African countries, with a projected growth of between 0.35 percent (US $ 28 billion) and 0.54 percent. percent (US $ 44 billion) of Africa’s GDP in 2040. relative to the baseline with no AfCFTA in effect.
Ghana’s GDP in 2040 will be between 0.29 percent (US $ 450 million) and 0.31 percent (US $ 510 million) higher than the baseline without AfCFTA , estimated the evaluation.
The assessment also tilted the country’s exports in 2040 to increase between 1.7 percent and 2.0 percent, equivalent to US $ 867 million and US $ 1 billion respectively, relative to the baseline situation.
With AfCFTA, the continent’s exports in 2040 will be higher by between 1.5 percent (US $ 40 billion) and 2.2 percent (US $ 56 billion), depending on the ambition of the liberalization reform.
The continent’s well-being will increase slightly, the assessment showed, due in large part to the expected significant expansion in intra-African trade. Ghana’s welfare is expected to increase by 0.3-0.4% compared to baseline.
However, tariff revenues will experience deficits ranging from 7.1% to 8.4% for Ghana and 6.5% to 9.9% for the continent, depending on the ambition of the liberalization.
Joseph Atta-Mensah, Senior Policy Advisor in UNECA’s Macroeconomics and Governance Division, who shared these findings at a hybrid business conference hosted by the Chamber of Commerce and Industry of France Ghana (CCIFG) in Accra, noted that the expected benefits would only materialize if the AfCFTA reforms are implemented effectively.
“A great emphasis must be placed on education and skills development in Africa to ensure that the adequate workforce is available, especially in the industrial sectors,” he said.
The role of the private sector in harnessing trade for Africa’s development should not be overlooked; it is the private sector that trades, innovates and generates more jobs, he added.
The AfCFTA initiative will launch a single market for Africa in which member countries will liberalize up to 90 percent of their merchandise trade over a five-year period.
Trading is expected to begin in January 2021, after it was postponed from July 2020 due to the coronavirus pandemic.
The initiative is expected to boost intra-African trade, which is currently low, and increase the continent’s industrialization.
Ziad Hamoui, national chair of the trade-focused advocacy organization Borderless Alliance and a co-speaker at the conference, said the AfCFTA will catalyze the continent’s integration efforts, but cautioned that its implementation must be inclusive.
“Africa needs to improve the business environment, develop local skills and production capacity, and make manufacturing more competitive,” he said. It also needs “more public-private collaboration to align political priorities with what people really want, including young people and women merchants.”
UNECA’s Joseph Atta-Mensah says that the benefits of the AfCFTA on the mainland would be realized only if its reforms are implemented effectively.
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