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Business News of Thursday, 27 August 2020


AfCFTA Secretariat will help remove trade barriers - Bawumia

The AfCFTA Secretariat is located in Ghana The AfCFTA Secretariat is located in Ghana

As the host of the Secretariat for the Africa Continental Free Trade Area (AfCFTA), Ghana will be at the forefront of advocacy for trade integration and the removal of trade barriers, Vice President Dr Mahamudu Bawumia has pledged.

The Vice President in a recent interview with global publishing research firm, Oxford Business Group (OBG) wooed investors, saying, “if you are coming to Africa, Ghana should be your first stop.”

Investors, he vowed were assured of the safety of their investments, a business friendly and an enabling legal and regulatory framework, when they locate in Ghana and serve the rest of Africa.

According to Dr Bawumia, “by establishing a base in our country, you can access the rest of the continental market.”

The Vice President who is also the Chairman of the country’s Economic Management Team said opportunities for Ghana’s private sector from AfCFTA were huge.

“Auto industry players including Volkswagen, Toyota and Nissan have begun expanding operations in Ghana, with an eye on the rest of the African market. We expect to see this trend across a range of sectors,” he said.

The Vice President observed that intra African trade was still very limited, noting that weak inland transport links are an obstacle, and: trade barriers act as another big deterrent to trade within the continent. However, there was room for improvement.

The deal comes at a time of increased demand for goods and services on the continent. With a population of nearly 1billion people and an increasingly numerous and affluent middle class, the African market presents notable potential for the future.

By 2030 the continent’s middle and high-income cohorts are expected to grow by 100 million to reach 160 million, according to the International Finance Corporation (IFC).

Such a rapid expansion of higher-income groups will significantly boost and diversify demand for goods and services.

The AfCFTA implementation therefore represents a chance to support regional production and reduce over-reliance on external trading partners.

The agreement stands to make the regional bloc the world's largest free trade area in terms of the number of participating countries since the creation of the World Trade Organisation in 1995.

It is expected to have a transformative impact on participating markets, with the agreement set to increase intra-African trade by 52 percent by 2022, according to a 2018 report from the UN Economic Commission for Africa (UNECA).

The UN Conference on Trade and Development (UNCTAD) forecasts a range of long-term economic benefits from the full implementation of the deal, including overall gains of $16.1 billion per year and the halving of the continent's trade deficit, along with GDP and employment growth of 0.97 percent and 1.17 percent respectively.

As an African initiative, driven by African states and institutions, the agreement stands as an economic game-changer, marking the continent's most ambitious integration initiative to date.

Nevertheless, considerable efforts will be required on the part of the signatories in order to ensure the full benefits of the deal are realised.