Financial institutions urged to partner and innovate for export growth in the AfCFTA era

Mr. Divine Kutortse, a Programme Officer at the National AfCFTA Coordination Office, has emphasized the need for Financial Institutions to evolve from mere regulators to collaborative partners with local businesses in Ghana.

He stressed that these institutions should not solely focus on loan repayments, but should actively innovate their product offerings for SMEs in Ghana, especially in light of the vast potential of the African Continental Free Trade Area (AfCFTA). This entails engaging with businesses across the entire trade spectrum.

Mr. Kutortse made these remarks during the CBG Thought Leadership Breakfast Meeting, which centered around the crucial theme of "Import vs. Export: The Role of CBG, Policymakers, and SMEs in Fostering Business Growth and Currency Stabilization".

According to Mr. Kutortse, studies on the four economies of the Economic Community of West African States (ECOWAS) — Côte d’Ivoire, Ghana, Nigeria, and Senegal, indicate that reducing the cost of trade finance and expanding access could lead to an 8% to 16% increase in merchandise trade across the four countries.

This translates to a range of USD 13 billion to USD 26 billion annually. Therefore, it is imperative for Financial Institutions to shift their focus from merely providing short-term loans to businesses. Instead, they should commit to nurturing these enterprises, offering sustained support to enhance their capacity and broaden their market reach.

During the event, Mrs. Edwina Assan, a producer-exporter and Sector Chair of AGI, raised concerns about the high-interest rates of banks affecting the competitiveness of local businesses in comparison to neighboring countries with lower interest rates. She suggested that a 5% interest rate is what local businesses need to be competitive in export trade and production.

Mr. Daniel Wilson Addo, Managing Director of CBG, expressed the bank's interest in promoting value-added export promotion by supporting local businesses to leverage the AfCFTA. He pledged the bank's commitment to providing long-term credit to facilitate business growth.

The inaugural CBG Thought Leadership Breakfast Meeting took place on October 19, 2023, at the Alisa Hotel in Accra. The event aimed to bring together stakeholders in the export sector to gather first-hand information for the purpose of better positioning financial institutions to serve the sector.

About the AfCFTA

The African Continental Free Trade Area (AfCFTA) is an AU initiative designed to enhance economic integration and trade within the African continent. It aims to create one of the world's largest free trade areas, eliminating trade barriers like tariffs and quotas, and thereby fostering increased commerce between African nations.

AfCFTA seeks to unlock the enormous potential of the African market, which encompasses over 1.3 billion people, and promote economic diversification, industrialization, and sustainable development across the continent.

According to the World Bank, Ghana's participation in AfCFTA is projected to increase its trade effect by at least US$148.3 million, leading to a surge in consumer welfare by US$8.597 million. Despite its significance, Ghana faces significant shortfalls in export trade financing.

Dignitaries at the event included the Managing Director of the Development Bank Ghana (DBG), Kwamina Duker, Professor Godfred A. Bokpin, Senior Lecturer at the University of Ghana Business School, Mr. Kwesi Korboe, Chief Executive Officer of GIRSIL, and Mr. Samuel Dentu, Deputy CEO of Ghana.