Background:
The Africa Continental Free Trade Area (AfCFTA) Agreement presents an enormous opportunity for Ghanaian businesses to connect to the regional market and be deeply integrated into the African single market. Ghana’s exports to Africa increased from US$1.37 billion in 2018 to US$1.4 billion in 2019, accounting for 2% of the total imports into the Africa region. As part of efforts to leverage on the opportunity of the AfCFTA, Ghana’s exports to African countries over the next 10years is expected to triple from current levels of US$1.4 billion to US$5.0 billion by the year 2030.
Presently, the Micro, Small and Medium-scale Enterprises (MSMEs) account for more than 70% of industrial activities in Ghana. These MSMEs will therefore play an important role in the national objective to expand and deepen intra-Africa trade with particular support from Metropolitan, Municipal and District Assemblies (MMDAs). Ghana has initiated processes including national-level conversations and strategy formulation to harness the opportunities AfCFTA offers and how Ghanaian manufacturing companies and exporters could take full advantage to reach the larger African market.
Local Authorities stand to benefit from the cascading effect of the free trade agreement. However, the benefits could only be realized when local authorities provide the needed information and support to local businesses and investors.
Repositioning MMDAs:
This section outlines areas that MMDAs need to consider in order to help local businesses take advantage of the AfCFTA. These processes, which also contributes to revitalizing local economic development, would help position local authorities to drive development of the local economy on the back of the AfCFTA.
1. Analysis of Existing Trade Patterns and Infrastructure
In order to maximize the full potential of the AfCFTA, MMDAs in Ghana must identify and focus on industries and goods with relatively low production costs and high market demand, compared to their trading partners.
2. Business Profile of the District
The business profile of the assembly provides an opportunity to document the essential information needed for investors with interest to undertake manufacturing activities in the district as well as local businesses that are seeking to explore opportunity to export their products to other countries. MMDAs should prepare business profile for their jurisdiction.
3. Markets and Accessibility
In terms of access to markets, the focus of MMDAs support programme should be to help MSMEs gain initial market access to individual markets, either for exporting, sourcing (importing) or local operations. This would include gathering and providing general market intelligence information, specific market analysis, the organization of trade fairs in collaboration with GEPA, GEA, Ghana Trade Fair Company and formation of effective business networks within the district.
Given that MSMEs lack the necessary manpower and financial resources and have restricted information channels to gather market information, MMDAs must work with key stakeholders such as GEPA, GEA, GSA, FDA to keep MSMEs updated on changing market trends both domestically and regionally, and provide an export-capable business infrastructure and provide a platform for free online business matching service.
The BAC and BRC units of MMDAs must be strengthened to work closely with GEPA, Shippers Authority and other institutions to provide export information, procedures and documentation.
4. Special Economic Zones
The MMDAs should be in the position to direct SMEs on how to acquire a single factory zone status in order to minimize the cost of production and make SMEs competitive in the regional market.
A single factory zone is a company that has acquired a free zone statue with the primary aim of producing for export. A single factory zone is required to export at least 70% of its total production, but in an event that the products are sent to the local market, such goods will be considered as imports and therefore taxable.
5. Trade Facilitation
The MMDAs must recognize that certain trade barriers at the local level, including physical barriers (border and transport issues) could affect business operations of SMEs, particularly, those who are into production of goods as well as provision of services for export to the wider African market.
MMDAs must work with relevant stakeholders including the Ghana Shippers Authority, Ghana Police Service, GRA-Customs to address these physical barriers so as to provide a sound business operating environment for SMEs within the districts.
Credits:
(i) National Development Planning Commission
(ii) United Nations Development Programme
