Viewpoint: Afua Adubea Koranteng
The African Continental Free Trade Area (AfCFTA) was established in 2018 by African Union member countries, with Accra as its Secretariat. Aimed at fostering socio-economic development, reducing poverty and boosting global competitiveness, the agreement had 54 signatories and 47 ratified countries as of August 2023.
The agreement is to be implemented in two phases: the first phase covers trade in goods, trade in services, dispute settlement mechanisms, and Customs and trade facilitation. Phase two covers intellectual property rights, investment, competition policy, digital trade, and women and youth in trade. These elements, once fully implemented by each member state, will enable the full integration and efficient operation of the AfCFTA. Ghana has legislation which covers both phases of the agreement. However, in areas such as competition policy, there remains significant work to be done.
Ghana is considered a non-least developed country (non-LDC) and is therefore required to achieve 90% liberalisation of tariffs by 2030. Non-LDCs, however, are able to maintain tariffs on an additional 3% of sensitive goods – those which require further inspection – with a liberalisation target of 10 years from when they join the AfCFTA. There is a final 3% of excluded products on which tariffs may be maintained by each member state with a review of such excluded products after five years.
The potential reduction in government revenue flowing from such tariff liberations pose a challenge for countries such as Ghana in the post-Covid-19 pandemic economic era. Nonetheless, a commitment to the implementation of such policies will ultimately benefit the country as it stands to gain broader advantages from liberalised tariffs across the continent.
In October 2022 Ghana joined the Guided Trade Initiative to boost trade in selected products. The following year the Ghana Commodities Exchange collaborated with other African exchanges to enhance food security and trade. If these exchanges align and enhance their laws, regulations and procedures, it will not only bolster food security, but also uplift the livelihoods of farmers, and small and medium-sized businesses.
To align with AfCFTA objectives, in August 2022 the government put in place the National AfCFTA Policy Framework and Action Plan for Boosting Ghana’s Trade with Africa and launched the AfCFTA Hub to facilitate digital trading and electronic commerce.
The Pan-Africa Payment and Settlement System (PAPSS), initiated under the AfCFTA in January 2022, is a centralised payment system for intra-African trade in goods and services. It allows individuals or businesses to issue payment instructions in local currencies to banks or payment service providers, enabling instant, cross-border payments in local currencies and avoiding delays. Compliance, legal and sanctions checks are also performed instantly in the system.
Since January 2022 the Bank of Ghana and Ghana Interbank Payment and Settlement Systems have onboarded 18 commercial banks to the platform. Realising the full benefits from PAPPS requires addressing challenges like insufficient infrastructure, navigating diverse regulatory frameworks and complying with complex requirements across multiple countries.
An effective payment system is vital for continental trade. Kenya’s initial export under the AfCFTA was Exide-brand batteries to Ghana in September 2022, and the following month Rwanda issued the first AfCFTA certificate of origin for coffee destined for Ghana. In October 2022 Ghana made its inaugural shipment of ceramic tiles to Cameroon. This highlights Ghana’s readiness for intra-regional trade, underscoring the need for swift implementation of policies and internal trade facilitation measures to achieve AfCFTA objectives.
Notwithstanding their noted benefits, such policies towards an AfCFTA trade liberalisation should be strategically juxtaposed against the continuing need for foreign direct investment and its attendant technology transfers to enable businesses in Ghana to succeed and thrive, not only within Ghana but across the continent.
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