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Ghanaian businesses – small, medium or large – have greeted the new year with high expectations.
Many had collapsed, while others were born from the stresses and opportunities of the coronavirus pandemic.
But the year 2021 holds its trade and enormous potential as Ghana and the rest of the continent begin their journey towards the world’s largest single market agreement under the African Continental Free Trade Area (AfCFTA). .
The World Bank estimates that this agreement will create the largest free trade area in the world as 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 US $ 3.4 trillion.
Ghana’s SMEs and AfCFTA
Even before Ghana won the bid to host the Single Market Agreement Secretariat, the government had introduced aggressive reforms and trade regulations to lower the cost of doing business and attract young entrepreneurs and angel investors. in the country’s booming market.
Business registration times have been drastically reduced, nuisance taxes removed, support and stimulus packages provided to SMEs, technology infrastructure established to help businesses migrate and remain viable in the digital space – so many interventions.
Already, the Ghana Association of Industries (AGI) has called this new era of African commerce “the game changer” in terms of industrial growth and opportunities.
Managing Director Seth Twum Akwaboah, when interacting with me on the trade program, Market Place, said: “This is a golden opportunity for Ghanaian industries to take over and be more productive and influential . This US $ 3.4 trillion trade market is going to be a game-changer for Ghanaian businesses, especially as we host the secretariat ”.
So far, all SMEs and start-ups in Ghana and the African sub-region have been taken into account in a policy to facilitate the smooth completion of the African Continental Free Trade Agreement (AFCTA).
Small businesses are feared to be overwhelmed by the deal, particularly in Ghana, where 70 to 80 percent of them face credit problems. But the United Nations Economic Commission for Africa (ECA) African Trade Policy Center coordinator David Luke told Joy Business that a special arrangement has been drafted to deal with the issue.
According to him, “the agreement itself provides for protection for infant industries, startups and SMEs and they are excluded from grants and this kind of government support, but clearly most of the support comes from domestic sources. . “
Diversifying Ghana’s Agriculture
Meanwhile, Senior Policy Advisor for ECA, Dr Joseph Atta-Mensah called for “the need for Ghana to stop being suppliers of raw materials to suppliers of finished products. We need to focus on agribusiness in order to get the most out of this deal. In the cocoa sector in particular, it is necessary to look at the multidimensional. We have a huge demand for chocolates all over the world, especially in African markets.
Investment-oriented reforms
Former UK Cabinet Minister Paul Yaw Boateng, when interacting with me with Zoom, said the success of the Continental Free Trade Agreement area will be based on reforms and strategies that will make the continent attracted by investors.
Paul Yaw Boateng explained that while threats from the coronavirus could be a challenge, the content must exploit the opportunities associated with regional integration.
“Yes, the pandemic is a crisis, the world is in recession. But this creates a unique opportunity, especially for SMEs. So we have to make sure that there is start-up capital for them, a transparent and reliable regulatory environment that facilitates entrepreneurship and facilitates investment, ”he said.
The emergence of a booming entrepreneurial space calls into question Africa’s readiness to support the expansion of SMEs to face global competition. Already, the high cost of loans is causing concern. Ebenezer Onyeagwu is Managing Director and CEO of Zenith Bank PLC.
“When we have the free trade area, I expect them to draw up a framework that should guide the various countries on institutional support to give flesh and blood to SMEs. We must see it as an entirely African project to achieve an economy of scale. “
Outstanding cases on rules of origin
Industry players, especially the international trade community, have insisted that education on the application of trade barriers as part of the agreement, as specified in the AfCFTA rules of origin in the area duty-free trade – which will determine the eligibility or not of goods to be traded – has not been done sufficiently adequately to allow the trading community to be aware of the relevant principles of the impending agreement.
Although the implementation of certain operational aspects of the African Continental Free Trade Area (AfCFTA) has been temporarily suspended, the agreement would be a very important element in supporting the post-pandemic recovery and fostering economic growth in the medium term. in sub-Saharan Africa. through the creation of larger and more integrated markets and the promotion of intra-continental trade.
It is important to note that the implementation of the AfCFTA will also reduce uncertainty over trade relations within the continent, which, combined with a larger and more integrated market, would promote domestic and foreign direct investment and help stimulate economic activity as countries emerge from the pandemic.
Prospects for intra-African growth
The International Monetary Fund, in its staff discussion notes released on May 13, 2020, predicts 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 in sustaining pandemic recovery and fostering medium-term economic growth in sub-Saharan Africa through the creation of larger and more integrated markets and the promotion of intracontinental trade.
It is important to note that the implementation of the AfCFTA will also reduce uncertainty over trade relations within the continent, which, combined with a larger and more integrated market, would promote domestic and foreign direct investment and help stimulate economic activity as countries emerge from the pandemic.
For the secretary general of the ZLECAf, 2021 marks a new stage in the economic history of Africa’s eco-commercial space.
“Today not only are we celebrating the start of a new year, but today we are giving Africa a fresh start, with the start of trade as a free trade area under the ZLECAf ”, he declared.
By Charles Ayitey
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