A new dawn in Africa: The African Continental Free Trade Area agreement

A new dawn in Africa: The African Continental Free Trade Area agreement
Source: Ghana| Frank Annor-Dompreh | MP for Nsawam-Adoagyiri
Date: 10-07-2019 Time: 03:07:09:pm

This is the statement by Frank Annor-Dompreh, MP for Nsawam-Adoagyiri delivered in Parliament to mark a new dawn in Africa with the coming into force of the Africa Free Trade Area agreement.

 

Mr Speaker,

The drive to Africa’s development remains bedded on its unity. African unity remains a vision that was and is being advocated for by many politicians, scholars, organisations and individuals on the continent. Undoubtedly, the efforts of the first president of Ghana, Dr Kwame Nkrumah were geared to ensure the conception of a united continent which is not only characterised by political unity but also, economic unity, a joint military force, common foreign policy and a borderless continent where all artificial borders are non-existent. 

Mr Speaker, Contemporary Africa today largely depends on the African Union (AU) to ensure a successful integration of the countries on the continent. An agendum of economic unity by member states as featured by the African Continental Free Trade Agreement (AfCFTA) which aims at ensuring the creation of a single continental market for goods and services, with free movement of business persons and investments.

Mr Speaker, Ghana has yet again proven to be a beacon for a positive African revolution, following the acceptance of the nation’s bid to host the secretariat of the African Continental Free Trade Area (AfCFTA). Not to put the cart before the horse, this is nonetheless an achievement worthy of note in the history of Ghana and Africa at large. It is pleasant to see progress in the objective to unify the African continent in all of its resources, with a sincere aim to improve the lives of the people of Africa, provide more opportunities and promote peace and harmony.

The African Continental Free Trade Area (AfCFTA) which has been under discussion for quite some time has continued to stir up interests and has increased in importance exponentially, as more and more stakeholders are realising the value and potential it holds. Free movement of persons; promotion of goods and services; accessibility to a wider range of entrepreneurial support in form of funding and logistics are all important ingredients for the development we wish to see here in Africa.

Taking into account the understanding of the layman on this issue, the AfCFTA may be demonstrated by the analogy of trade occurring in large countries in terms of area. Nigeria for example with an estimated GDP of $376.284bn (2017) and a population of over 200 million, may be seen as a large country compared to Ghana and for that matter is capable of generating trade activity in larger volumes.

The larger the market-space, the greater the potential for the increased demand for goods and services. This then affects supply in a positive manner for the growth of businesses. This is the kind of environment we need, one key component of the AfCFTA will create that large market-space for a business person in say Wenchi-Ghana, to supply goods produced, to consumers in Kigali-Rwanda and vice versa free of tariff. 

Retracing the objectives of the AfCFTA Mr Speaker, the African Union report that, the CFTA will create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Customs Union. It will also expand Intra-African trade through better harmonization and coordination of trade liberalization, across Africa in general. 

It will resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes. Competitiveness will be enhanced at the industry and enterprise level through exploiting opportunities for scale production, continental market access and better reallocation of resources.

As several individual and organisational studies probe into the longevity of the AfCFTA, we are continuously prompted to factor in all challenges and possibilities to ensure optimum operation. One of such is the report from the United Nations Conference on Trade and Development(UNCTAD), recently discussing the ‘Rules of origin’—what it believes to be a key component of success for the AfCFTA signifying a simple and business-friendly trade arena.  

Theoretically, ‘Rules of origin’ would represent a passport for goods to circulate duty-free within a free trade area (FTA) as long as those goods qualify as originating within the FTA. It is therefore important to make trade within African countries more attractive, considering the reality that many African countries may already be used to trading with foreign counterparts over the years.

I will again highlight that, the economic benefits such as employment creation, capital inflows, the influx of goods and services, and a boost of the tourism industry would be directly generated along with the CFTA Secretariat based in our beloved country Ghana and ripple to all participating states.

Mr Speaker, Ghana has managed to maintain ideal bilateral relationships with other states within and outside Africa and this certainly speaks volumes about the capability of the nation to adequately manage the AfCFTA secretariat, on a positive record of negotiation capacity and amiable attitude towards member states in the African Union.


Africa’s trade has grown rapidly in recent decades. During 1990–2017, the region’s trade openness (imports and exports of goods and services) increased from about 53% of GDP to 67%, after peaking around 2011 as commodity prices surged.

The UNCTAD also reported that intra-African trade is a mere 15% of the total trade volumes generating from the African continent, compared to areas abroad which are as high as 61% in Asia, 67% in Europe, and 47% in America. While overall intra-African trade is miniscule, studies by a Council on Foreign Relations show that about 42% of intra-African trade consists of industrial goods and I interpret this to be a good potential for the sustainability of the AfCFTA even as it is expected to grow.

With the agreement underway, the gross domestic product of most African countries could increase by 1% to 3% once all tariffs are eliminated, also according to UNCTAD estimates. Though tariff may not be the only barrier for increased intra-African trade, Regional Economic Outlook on Sub Saharan Africa believes that the agreed 90% tariff cut would increase intra-African trade by about US$16 billion or about 16% over recent average levels.

South Africa alone is the source of about 35% of all intra-regional imports in Africa (and about 40 per cent of intraregional manufacturing imports). Specifically, exports to Sub-saharan Africa, South Africa generates a significant $22.8bn compared to Nigeria and Ghana generating $5bn and $2bn respectively. Interestingly Ghana and Nigeria export shares are sourced from South Africa which attests to their 35% intra-regional imports.

Following this narrative, the efforts of Ghana matchup adequately when the focus is placed on trade volumes within the ECOWAS region only, just as South Africa exert dominance in the southern bloc. With the secretariat here in Ghana, I foresee an improvement in Ghana’s contribution in the years to come.

Mr Speaker, the President of the Republic of Ghana Nana Addo Dankwa Akufo-Addo provided some reasons why he believes this country is an ideal place to site the headquarters. The President did well to mention that Ghana through the ages continued to play a pivotal role in the unity of Africa. This has shown Ghana’s commitment to the success of the AfCFTA and its interest to sustain it. An important attitude which cannot be overemphasised. Likewise, I earlier expressed that Ghana should be the ideal choice, because she has a long history of peace and stability, and it has formed an undisputed argument for the case of Ghana.

As major players like South Africa, and the likes, strive to increase trade volumes within Africa, the AfCFTA is indeed poised to commence an economic transformation that will improve the continent significantly.

African leaders should also be commended for their efforts in the African Union, coordinating all too well, the organisation of this beneficial agreement. It is a resounding success at the governmental level which will surely wind down to the individual citizens being represented by their leaders across the continent.

In conclusion, Mr Speaker, the Akufo-Addo-led government flagship programmes - One-District-One-Factory (1D1F) and Planting for Food and Jobs - are good initiatives that put the country at a unique position on the African continent in terms of industrialisation. The country's peace and tranquillity, enabling laws and policies, smooth political transitions, hospitable citizens and existing facilities make it stand out in a position that propels her to win this bid.

For the people in Ghana, the AfCFTA secretariat established will be an advantage that all need to make good use of especially in our current regime to industrialise and produce goods sufficiently. It will not be a surprise to historians that Ghana stands out always. Let us not forget the meaning of the symbol in the flag of our dear nation Ghana. For we are the black star of the continent and it dawns on us to shine always in all of our endeavours.

I herein call on the nation Ghana in light of the honour done us to host the secretariat of this prestigious Pan-African institution, to resist the pull to be a latent force simply hosting the secretariat, but rather proactively manage it, taking into account the reverberating impact it has on the much larger African community. Indeed, to whom much is given, much is expected.

Thank you for the opportunity given.

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