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Ghana will find it difficult to compete with South Africa, Egypt, Morocco and Kenya in the African Continental Free Trade Area, based on the 12 pillars of the Global Competitiveness Index, a report from the think tank on research and public policy, revealed CUTS International. .
However, with a recent total competitiveness score of 51.2% across all 12 pillars, Ghana is competitive against its neighboring countries.
For example, Ghana performs better in terms of institutions than Nigeria and Côte d’Ivoire, but behind South Africa and Morocco.
According to CUTS ‘international assessment of private sector readiness for AfCFTA, whether or not implementing AfCFTA is beneficial to the private sector in Ghana depends on its readiness.
Indeed, said sector is the key player with regard to the agreement
Ghana’s export potential
Regarding Ghana’s export potential, the report indicates that Ghana has a considerable number of products with export potential to the African market.
However, the products with the highest export potential to the said market are malt extract, palm oil (excluding crude) and fractions, and uncooked pasta. In addition, the country has the greatest capacity to supply cocoa beans while palm oil (excluding crude) and fractions is the product facing the greatest potential demand in Africa.
Nonetheless, there is a huge gap in Ghana’s export potential to Africa that needs to be bridged with regard to the AfCFTA.
Private capacity to produce and export to Africa
The report states that Ghanaian businesses face challenges such as reliability of electricity, difficulty in cross-border trade, access to ICTs, difficulty in starting a business, high cost of capital, among others.
He added that this affects their ability to produce and export to other African countries.
Government initiatives to promote the private sector
Over the years, the government of Ghana has launched several policies and programs to promote private sector activities.
However, the survey indicated that such initiatives under the current government dubbed the Ten Point Program for Industrialization include the Export Development Program (e.g. one district and one factor), SME development and Strategic anchor industries haven’t given much returns.
Readiness assessment
In terms of readiness assessment, the results showed that all industries would need an extra push for competition before they can compete effectively as they face some challenges including high production costs, poor finishes and packaging, inadequate qualified personnel, unavailability of some raw materials, etc.
Nonetheless, all industries have unique selling points which give them a competitive advantage over their African counterparts. A large part of such an advantage lies in the quality content of the products and the availability of some unique resources.
Regarding the capacity to innovate, the analysis showed that all industries have a good capacity to innovate. However, they still need to be improved, as there are challenges when introducing new or significantly improved products or production processes and acquiring new technologies.
Some of the challenges are accessibility to a skilled workforce, the high cost of obtaining credit to undertake creative and innovative activities, among others.
Company level and policy recommendations
The report states that companies, especially SMEs, must have a clear plan (export strategy) to boost their export sales.
He also wants companies to focus more on adding value, such as improving packaging and finishing by drawing inspiration from international best practices. This will allow them, to some extent, to survive the emerging competition.
He also said “there is a need to have a national implementation strategy and action plan that provide systematic, uncut, inclusive processes and measures to ensure the implementation of the AfCFTA.
The study selected companies to assess their readiness for the implementation of the AfCFTA. It was conducted from October 2019 to March 2020 and was based on a sample of 120 randomly selected companies from three heavily dominated private sector regions including Greater Accra, Ashanti and Western regions.
Five private sectors were selected for the study, including the pharmaceutical and phytotherapeutic industry, the tourism and hospitality industry, the food and beverage industry, the food industry and clothing, leather and textile industries.
The selection of these sectors was based on the government’s list of priority products and their contribution to economic growth and development, including their growth potential. Although the tourism and hospitality industry is not among the government’s priority products, its selection was reasonable due to its greater contribution to economic growth and development.
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