The African Continental Free Trade Area (AfCFTA) is a Single Market (Duty-free, Quota-free) covering the entire African Continent with a total population of 1.2 billion and a combined GDP of almost USD 3 trillion. So far 54 countries out of 55 (with the exception of Eritrea) have signed the AfCFTA and 27 countries have ratified the Agreement.
The AfCFTA is the single most significant development in Africa since the establishment of Organisation of African Unity (OAU) in 1963. It is considered as the flagship project under the AU Agenda 2063. It is the world’s largest Free Trade Area, second only to the World Trade Organisation (WTO) in terms of the number of member states.
Strategic business objectives
The AfCFTA seeks to:
- Increase intra-African trade through better harmonisation and coordination of trade within the African continent. It is estimated that intra-African trade will increase by as much as $35 billion per annum or 52% by 2022;
- Address the challenge of small fragmented markets in Africa by creating a single continental market which will lead to economies of scale;
- Add value to Africa’s abundant natural resources and promote economic diversification and industrialization;
- Develop regional value chains and facilitate cross border investments;
- Enhance access to an expanded market for SMEs in Africa on preferential trade terms;
- Attract Foreign Direct Investments (FDI) into Africa with strong regional and local content;
- Facilitate the integration of Africa economies into global markets;
- Significantly improve the Terms of Trade for African countries;
- Enhance benefits to consumers in Africa through lower prices of goods imported from within Africa; and
- Significantly enhance employment opportunities in Africa particularly for the youth.
Priority areas of the AfCFTA and how Ghana has positioned itself to harness the benefits
The benefits of the AfCFTA will not come automatically. To harness the benefits of AfCFTA by AU Member States, a Programme of Action to Boost Intra-African Trade (BIAT) has been endorsed by AU Heads of State.
The BIAT looks at some cluster priority areas, and it is instructive to note that Ghana is already ahead in all those areas towards harnessing the benefits from the free trade area.
The clusters are: Productive Capacity (Industrialisation); Trade Facilitation; Trade-related infrastructure (e.g. Transportation and Communication); Trade Finance; Trade Information; Trade Policy; and Factor Market Integration
- Industrial Productive Capacity – Under this cluster, Ghana is already implementing programs such as the “One District One Factory (1D1F)” Initiative; establishment of Strategic Anchor Industries Initiatives such as automobiles, iron and steel industries. Ghana is equally vigorously pursuing the “One Region One Park” initiative (Industrial Parks & Special Economic Zones) and the development of the SME sector to enable them tap into the value chain.
- On Trade Facilitation, there are ongoing Customs Management Reforms including the Single Window Platform and implementation of the paperless system. The country is also implementing the WTO Trade Facilitation Agreement.
- The third area of priority has to do with trade-related Infrastructure. It is worth noting that the Port Expansion Project, facelifts in transport infrastructure such as roads, airports and railways is a testament that Ghana is ready for the AfCFTA.
- In the area of Access to Finance, there is the ongoing rollout of the Stimulus Package for Local Industries; EXIM Bank Financing: Venture Capital Trust Fund; Ghana Infrastructure Investment Fund; FINTECH; ongoing Banking Reforms.
- On Trade Information, the country already has the Ghana Commodity Exchange; The Electronic Trade Information system of the Ghana Export Promotion Authority (GEPA), among others.
- With regard to the area of Trade Policy, Ghana already has in place a National Trade Policy; Trade Sector Support Programme; National Industrial Policy and an Industrial Sector Support Programme.
Conclusion
There could not have been a better time than now for Ghana to be hosting the Secretariat of AfCFTA. In-spite of Ghana’s pioneering role in the struggle for independence in Africa and subsequent contributions to the integration of the African continent, Ghana has not had the honour and privilege of hosting any AU Organ. Although it has been long in coming, it has come at a time when Africa is rising and Ghana is rising.
Ghana can and should leverage the opportunity of hosting the AfCFTA Secretariat to become the new commercial capital of Africa, a regional trade hub and economic epicentre and the new gateway to the continent.
The hosting of the Secretariat will promote Ghana as an attractive investment destination and actively promote Foreign Direct Investments. It will attract major international financial institutions and become the preferred location for siting the Corporate Headquarters of international companies doing business in Africa. It will provide opportunities to recruit Ghanaian professionals and administrative staff to work in the Secretariat.
The AfCFTA will enhance Government’s current Industrial Development Agenda and contribute to the diversification of the Ghanaian economy and open up new market access opportunities under preferential terms for Ghanaian producers particularly SMEs.
Ghana will have the opportunity of hosting various Regional and Continental meetings and other events associated with the AfCFTA and also enjoy many other collateral benefits which would enhance income levels of many Ghanaians.
Hosting of the AfCFTA is, without doubt, a major step in Ghana’s march towards economic prosperity.