The Africa Continental Free Trade Agreement: Implications for the Republic of Ghana
The Africa Continental Free Trade Agreement (“AfCFTA”) will bring together 1.2 billion people with a combined gross domestic product (GDP) of more than USD2 trillion. It will progressively remove tariff and non-tariff barriers in the hopes of boosting intra-African trade, currently at 14% of total African trade, by 52% in 2022. Ghana, the most politically stable country in the sub-region, with an average annual GDP growth rate of 6.67% over the last decade, is hopeful that it can boost intra-African exports and imports from current levels of around USD 2.5 billion and USD 1.2 billion respectively. Under AfCFTA Ghana also hopes to increase intra-African FDI. Having been selected to host the secretariat, Ghana is already well positioned to benefit from AfCFTA right from the start. The secretariat is expected to drive increased air and other traffic into Ghana, as well as boost demand in the hospitality, commercial and residential real estate and other related sectors.
In addition to these benefits, it is hoped that Ghana will see more benefits in the years to come. In recent years, Ghana has undertaken measures that should help. Notably, it has made improvements to its physical infrastructure and has taken significant steps to improve the business climate. On the infrastructure front, USD1.5 billion has been invested in the expansion of the Tema Port, to increase capacity from 836,000 TEUs to about 2 million TEUs per year. A floating dry dock capable of servicing vessels and rigs of various sizes is also in the works as are other port expansion projects in the port of Takoradi. Various railway development projects are underway, including the Tema-Ouagadougou 690 km freight and passenger railway line. The Ghana Airports Company recently unveiled a new terminal at Kotoka International Airport that expands the capacity of the airport from approximately 2 million passengers to 5 million passengers per annum, as part of its plans to become a hub in West Africa.
Ghana has also implemented various measures to strengthen the trade and investment climate including the recapitalization and rationalisation of the banking and insurance sectors, modernising its regulations, streamlining and digitizing processes at various ministries, departments and administrative agencies such as the Registrar of Companies, the ports, the courts, and the Lands Commission. A paperless port and single window clearing service have been implemented in the ports to reduce the time for clearing of goods and services at the ports to between 4-8 hours. Ghana has also implemented strategic initiatives such as the “One District One Factory”, “One Village One Dam” and “Planting for Food and Jobs” that it hopes will help Ghanaian businesses to develop scale, better enabling them to compete on a continental level in the medium term.