In order to take optimal advantage of the opportunities presented by the African Continental Free Trade Area Agreement, the Association of Ghana Industries is considering building the capacity and competitiveness of key industries in the country.
This forms part of the strategy the Association wants to embark on in the wake of the commencement of AfCFTA’s implementation which effectively has created the world’s biggest single market in terms of the number of members and geographical size.
To this end AGI’s Governing Council is planning a series of meetings with member companies that fit the bill, after which it will take the considerations and recommendations derived from those meetings to engagements with government itself, as represented by the Ministry of Trade and Industry, with a view to securing policy support for their expansion into markets across the continent.
Briefing the media at the most recent AGI breakfast meeting, the CEO of the Association, Seth Twum-Akwaboah said, “For us what is important is to have our industries capacity developed, so we can take the full advantage of the AfCFTA.”
The CEO noted that the Association is going to select specific sectors which the country has comparative advantage compared to other countries on the continent.
Some of these sectors include the Aluminum, Agro-processing, Garment and textiles industries.
“We can also look at the high-end manufacturing products as well. Already, we have some Ghanaian products being exported to other African countries, for instance, the ISO certified electrical cables that are being produced in the country,” he said.
Another example of this is in steel manufacturing where Ghana’s exports to the rest of West Africa doubled last year, leveraging on easily the biggest installed production capacity in the sub region. Similarly, Ghana is exporting plastic HDPE pipes across both West and Central Africa too.
However, Mr. Twum-Akwaboah noted that most companies in the country are small scale, which limits their production capacity.
“If you are unable to produce in large volumes, you are not able to enjoy economies of scales, which makes your production cost per unit higher and uncompetitive,” he stated.
The Association is urging government to carefully evaluate the about 90 percent of tariff lines (products) under the Continental Free Trade (CFT) agreement, taking cognizance of local production capacity.
This will position Ghanaian industries to fully leverage the opportunities under the agreement, else the country runs the risk of being marginalized.
The AfCFTA will amongst other benefits enable countries that are signatory to the agreement access to a market of 1.2 billion people with a combined Gross Domestic Product of US$ 2.5 trillion.
This will significantly boost intra-African trade from 12 percent of total trade currently done by African counties, which is very low as compared to intra-EU trade, intra-Asian Trade and intra- North American trade which stand at 68 percent, 53 percent and 46 percent respectively.
A successful implementation of the AfCFTA would increase intra-African Trade by as much as US$35 billion per year, or 52 percent above the baseline by 2022.
Consequently, imports from outside the continent could decrease by US$ 10 billion per year, whereas Agricultural and Industrial exports would increase by US$ 4 billion (7 percent) and US$ 21 billion (5 percent) above the baseline respectively.