File photo Ghana’s joining the African Trade Insurance agency, ATI, could not have come at a more opportune time. In July this year, the African Continental Free Trade Agreement will come into effect, creating the world’s largest free trade area, adjudged by both geographical size and market population. This market is worth US$4 trillion in consumer and business spending and its commencement is expected to serve as a trigger for a projected 20 percent increase in foreign direct investment into the continent, to some US$50 billion, with multinationals from the United States, United Kingdom and France likely to continue holding the largest share of FDI in Africa.
This opens the door for exporters in Ghana to secure new markets across the continent for their products and to increase their market share in countries which already buy their products – although this also comes with the danger of losing market share to exports from other African countries which are more quality or price competitive.
Similarly, the advent of AfCFTA creates opportunities for importers in Ghana of goods from other African countries which will henceforth be more price competitive because import duties will no longer be applicable on them.
Instructively, Ghana has successfully bid to become the administrative headquarters of AfCFTA, a clear indication of the country’s commitment to its success. Indeed, Ghana is hoping that it will provide the platform for a major increase in non-traditional exports and consequent, direly needed, foreign exchange earnings. In 2018, Ghana made US$2.813 billion from non-traditional exports and instructively, the biggest share of this came from West Africa, where the ECOWAS Trade Liberalization Scheme already allows duty free export of goods from Ghana to fellow member states of the sub regional grouping.
The extension of duty free export status to most of the rest of Africa therefore provides a clear opportunity to Ghana, which aims to increase its NTE revenues to US$5 billion by 2023 and US$10 billion by 2028.
However, export is a tricky business, more so in Africa which has political as well as commercial risk. Political instability often translates into macroeconomic and public policy instability; and African governments and enterprises alike are notorious, by global standards, for reneging on commercial agreements for various reasons – or excuses to put it more accurately.
This is where the ATI is crucial. It was established in 2006 to provide, facilitate, encourage and otherwise develop the provision of, or the support […]