Saturday, 22 June 2019

3 more nations yet to sign Africa Free Trade Agreement

Image result for african continental free trade area
Adnan Adams Mohammed

The aspirations of African businesses and governments having free and easiest access to the biggest single market in the world starts in July as only three nations left to sign the agreement.

So far, 52 African countries out of the 55 have signed the Continental Free Trade Agreement, with countries yet to sign are Nigeria, Benin and Eritrea. Mr. Nyame Baafi, a Director at the Ministry of Trade representing Alan Kyeremanten said at the 26th Society for Worldwide Interbank Financial Telecommunication (SWIFT) African Regional Conference in Accra, last week.

Some economists have expressed that the agreement which comes with tariff-free access to a huge and unified market will encourage manufacturers and service providers to leverage economies of scale; an increase in demand will instigate an increase in production, which in turn will lower unit costs. This will arguably translate into consumers paying less for products and services as businesses expand their operations and hire additional employees.

“We look to gain more industrial and value-added jobs in Africa because of intra-African trade,” said Mukhisa Kituyi, secretary-general of the UN Conference on Trade and Development, a body that deals with trade, investment and development, in an interview with Africa Renewal.

The Agreement would make the region with the potential market of 1.2 billion people with a cumulative Gross Domestic Product of US$3.4 trillion.

If the agreement is successfully implemented, a free trade area could inch Africa toward its age-long economic integration ambition, possibly leading to the establishment of pan-African institutions such as the African Economic Community, African Monetary Union, African Customs Union and so on.

Vera Songwe, executive secretary of the ECA, in an interview with Africa Renewal said, “The types of exports that would gain most are those that are labour intensive, like manufacturing and agro-processing, rather than the capital-intensive fuels and minerals, which Africa tends to export.”

The youth will mostly benefit from such job creation. In addition, African women, who account for 70% of informal cross-border trading, will benefit from simplified trading regimes and reduced import duties, which will provide much-needed help to small-scale traders.

However, the implementation of the Africa Continental Free Trade Area, which is expected soon, would come with some minimal shocks though it would not hurt the country’s economy, Finance Minister Ken Ofori-Atta has said.

The benefits far “outweigh” the initial shocks that would come with the implementation of the African Free Trade Agreement on the economy, he explained.

Ghana over the past years had some challenges in meeting its revenue targets, however, the government has argued it is implementing some measures to help deal with the challenge.

This has however led to some economists arguing that implementing the continental free trade deal could come with some challenges for the economy in terms of revenue the country was generating from the movement of goods in the region.

“Some structures that they are have instituted together with other measures would help increase trade volumes at the port, a development that would help minimize the expected shocks on Ghana”, Mr Ofori-Atta said recently in Malabo, Equatorial Guinea.

Mr Nyame Baafi speaking at the SWIFT African Regional Conference listed a number of possible challenges that needed to be addressed. Among them are that, most businesses and nations lack adequate supply capacity even though there exist a big market access; inadequate infrastructure and poor telecom networks; ports and borders challenge of linking various custom authorities to create joint inspections.

Others are: financing access challenges. High interest rates which comes with high transaction cost in Africa; and man power in Africa challenges. The gap between what universities produce and what the labour market needs.

Ghana and the other 51 countries that have signed up to the Agreement would start its full implementation from July 2019.

With Ghana being one of the proponents of this Agreement in creating the common market, it therefore thinks, it would be right to have the headquarters in the country.

Mr Ofori-Atta has justified to its citizens why Ghana is bidding for the headquarters of the continental trade pact, he expressed that, “When you have this headquarters here, it would also help in our bid to make Ghana the hub for financial and aviation activities in Africa”.

According to the Finance Minister, a lot of work has been done and he is optimistic of Ghana being selected by the African Union to host the secretariat, “looking at the work that has been done so far by the Minister of Foreign Affairs and Trade minister as well as other ministers, I am convinced that we would get the headquarters”

He also added that President Akufo-Addo has also made some calls to other leaders to ensure Ghana get to host the headquarters in Accra.