Ghana’s merchandise trade competitiveness declined over the last decade, resulting in a reduction in the number of exporting firms and their participation in Global Value Chains (GVCs), a World Bank report, has said.
The report, however, said improvements in transport logistics and access to information communication technology infrastructure over the last decade can be leveraged for expanded trade and economic transformation; a key pathway to the creation of quality jobs.
The report was culled from a book titled “Ghana Trade Competitiveness Diagnostic-Strengthening Ghana’s Trade Competitiveness in the Context of AfCFTA.” Co-authored by Daniel Kwabena Boakye and Jean-Christophe Maur stated that trade in services and foreign direct investments are also important for ensuring deeper integration into GVCs and the efficiency of the manufacturing sector.
Daniel Kwabena Boakye is a Country Economist at the World Bank Ghana office whilst Jean-Christophe Maur is a Senior Economist in the Trade and Regional Integration team based in Washington D.C.
The book was launched in Accra and was interspersed with a panel discussion.
It attracted Hon. Herbert Krapa, Deputy Minister for Trade and Industry, Professor Asafu-Adjaye, Senior Fellow-Economic Management, and Governance Programs, Africa Centre for Economic Transformation(ACET), Dr. Priscilla Twumasi Baffour, Senior Lecturer, Economics Department, University of Ghana, Legon and Mr. Seth Twum Akwaboah, the Chief Executive Officer, Association of Ghana Industries.
“The potential benefit offered by the AfCFTA (about 0.5% additional Gross Domestic Product growth per annum over the next ten years) is very significant, says Pierre Laporte, World Bank Country Director for Ghana, Liberia, and Sierra Leone.”
This, he said, should motivate Ghana to harness the transformative potential of a trade by cultivating export-oriented activities in both manufacturing and services and following up with the outstanding negotiations and implementation of the AfCFTA protocol.
The report lays out four main policy recommendations and conclusions for strengthening trade competitiveness in the context of AfCFTA.
On strengthening trade competitiveness in the context of AfCFTA, the report recommended that to enhance Ghana’s participation in GVCs, Ghana needed to strengthen its trade competitiveness, particularly that of the manufacturing sector, promote inflows of foreign direct investment, and deepened its regional integration efforts into regional markets and global value chains, especially in the manufacturing sector.
This, according to the recommendation would help boost incomes by increasing access to markets, technology, skills and increasing the domestic value-added in exports.
Ghana’s participation in GVCs, it said, remains mostly in commodities whilst its aspirational peers, Kenya and South Africa have graduated from the commodity group into a limited manufacturing group of participants in GVCs.
With regards to improvement in the efficiency of trade facilitation, the report recommended strengthening customs administration to reduce the costs of facing traders and improving the ease of trading across borders.
Other trade facilitation improvements, it mentioned, include the removal of VAT on transit services and the removal of redundant and ineffective checkpoints.
It also recommended that special effort should be made to support the segments of the services sector that more are dynamic with potential for innovation and economies of scale.
These include services such as business services, professional services, financial services, and information technology-enabled economic activities.
Policy reforms according to the recommendation are necessary to take advantage of the potential opportunities offered by AfCFTA and GVCs.
These include reducing tariffs where appropriate such as reduction of tariffs on imported raw materials, eliminating non-tariff barriers, improvement in trade facilitation as well as promoting a favorable business and investment climate.
Ghana, Daniel Boakye explained, is well-positioned to leverage trade in services including logistics services, foreign direct investment, and trade policy to consolidate the country’s comparative advantage as a hub for business and financial services in the West Africa sub-region.
He however said more needed to be done to remove the obstacles to trade flow in Ghana.