Ghana will find it difficult to compete with South Africa, Egypt, Morocco, and Kenya in the Africa Continental Free Trade Area, based on the 12 pillars of the Global Competitiveness Index, a report by research and public policy think tank, CUTS International has revealed.
However, with a recent total competitiveness score of 51.2% from all the 12 pillars, Ghana is competitive compared to its neighboring countries.
For example, Ghana performs better in terms of institutions than Nigeria and Cote D’Ivoire, but trails behind South Africa and Morocco.
According to CUTS International Assessment of Private Sector Readiness for AfCFTA, whether or not the implementation of the AfCFTA would be beneficial to the private sector in Ghana depends on its readiness.
This is because the said sector is the key player as far as the agreement is concerned
Ghana’s Export Potential
For Ghana’s Export Potential, the report said Ghana has a considerable number of products with export potential to the African market.
However, the products with the highest export potential to the said market are malt extract, palm oil (excluding crude) & fractions, and uncooked pasta. Moreover, the country has the highest supply capacity in Cocoa beans whereas Palm oil (excl crude) & fractions is the product that faces the strongest demand potential in Africa.
Nonetheless, there is a huge gap in Ghana’s export potential to Africa that must be addressed as far as the AfCFTA is concerned.
Private capacity to produce and export to Africa
The report said Ghanaian businesses are confronted with challenges including power reliability, the difficulty of trading across borders, access to ICT, difficulty of starting a business, high cost of capital, among others.
It further said these affect their capacity to produce and export to other African countries.
Government Initiatives to Promote the Private Sector
Over the years, the Government of Ghana has initiated several policies and programmes to promote private sector activities.
However, the survey said such initiatives under the current government dubbed the Ten Point Agenda for Industrialization include Export Development Programme (e.g. One District One Factor), Development of SMEs and Strategic Anchor Industries have not yielded much returns.
In terms of the readiness assessment, the results showed that all the industries would need additional push for competition before they can compete effectively since they are confronted with some challenges, notably high cost of production, poor finishing and packaging, inadequate skilled personnel, unavailability of some raw materials, etc.
Nonetheless, all the industries have unique selling points that give them a competitive advantage over their African counterparts. Such an advantage is largely found in the quality product content and the availability of certain unique resources.
Regarding the ability to innovate, the analysis showed that the entire industries have a good ability to innovate. However, they would require further improvement as there are challenges when introducing newly or significantly improved products or production processes and acquiring new technology.
Some of the challenges are accessibility to skilled labour, high cost of getting credit to undertake creative and innovative activities, among others.
Firms level and policy recommendations
The report said firms particularly SMEs need to have a clear-cut (export strategy) plan to drive their export sales.
It also wants the firms to also focus more on value addition such as improving packaging and finishing by learning from international best practices. This will enable them, to some extent, survive the emerging competition
It also said “there is the need for a national implementation strategy and action plan that provides systematic, uncut, inclusive and processes towards measures to ensure AfCFTA implementation.
The study selected firms to assess their readiness for the implementation of the AfCFTA. It was conducted from October 2019 to March 2020 and was based on a sample of 120 firms selected randomly from three highly dominated private sector regions, including Greater Accra, Ashanti and Western regions.
Five private sectors were selected for the study, including the pharmaceutical and herbal industry, the tourism and hospitality industry, the food and beverages industry, the agri-business industry and garment, the leather and textiles industries.
The selection of these sectors was based on the government’s list of priority products and their contribution to economic growth and development, including their growth potential. Although, the tourism and hospitality industry is not among the government’s priority products, its selection was reasonable because of its greater contribution to economic growth and development.
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