Ghana will soon begin harnessing the trade benefits that come along with the African Continental Free Trade Area agreement (AfCFTA) as the African Union (AU) expects to begin implementation shortly.
Only three more countries are needed to ratify the agreement before implementation can commence and the AU is looking to a couple of North African countries to sign up within the next couple of weeks.
The agreement needs 22 ratifications, but only 19 ratifications have been received so far. This has put the AU and its free trade agreement behind schedule since it had expected to have 30 ratifications by the end of 2018.
Ghana was one of the first countries to ratify the agreement, drawn up in April last year and is so enthusiastic about its prospects that it is in the running to host the secretariat that will run the continental common market.
However, several African countries, most notably Nigeria have declined to sign up, arguing that their manufacturing industries are not competitive enough to compete wit the continent’s most industrialized economies, and thus joining would cost local market share and jobs.
The AfCFTA was originally billed to be the largest free trade zone in the world, but the slow pace of ratification now puts this in doubt, at least for now.
To boost the policy initiative among member states, the European Union (EU), has committed €4 million, out of the estimated €50 million, needed to fund the establishment of the AU Trade Observatory, a key pillar of the implementation of AfCFTA.
This was revealed during the signing of a joint letter of intent between the African Union Commission, the EU Commission, the International Trade Centre (ITC) and the Regional Economic Communities (RECs) who are cooperating to implement the policy.
The Ministry of Trade and Industry (MOTI) will be the institution responsible for the implementation of the AfCFTA in Ghana.
It is expected that the implementation of the trade agreement will be an enabler to attract Foreign Direct Investment (FDI) into Ghana and help wean the continent off foreign aid.
An assessment done by the Corporate Affairs department of the Ghana Export Promotion Centre (GIPC) states that the agreement will increase Africa’s competitiveness, boost Ghana’s manufacturing sector, spur economic growth and boost industrialization.
According to the African Union Commission, the AfCFTA aims to increase intra-African trade by 52 percent by the year 2020, remove tariffs on 90 percent of goods, liberalise services and tackle other barriers of inter-African trade, such as long delays at border posts.
By Dundas Whigham