ACCRA, June 9, 2022 — 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). However, improvements in transport logistics and access to ICT infrastructure over last decade can be leveraged for expanded trade and economic transformation; a key pathway to the creation quality jobs, says the World Bank’s latest trade analysis for the country.
The newly released Ghana Trade Competitiveness Diagnostic- Strengthening Ghana’s Trade Competitiveness in the Context of AfCFTA, notes that trade in services and foreign direct investments are also important for ensuring deeper integration into GVCs and efficiency of the manufacturing sector.
“The potential benefit offered by the AfCFTA (about 0.5% additional GDP growth per annum over next ten years) – is very significant, says Pierre Laporte, World Bank Country Director for Ghana, Liberia and Sierra Leone “This should motivate Ghana to harness the transformative potential of trade by cultivating export-oriented activities in both manufacturing and services and following up with the outstanding negotiations and implementation of the AfCFTA protocols.”
The report lays out four main policy recommendations and conclusions for strengthening trade competitiveness in the context of AfCFTA.
- To enhance s participation in GVCs, Ghana needs to strengthen its trade competitiveness, particularly that of the manufacturing sector, promote inflows of foreign direct investment, and deepen its regional integration efforts into regional markets and global value chains, especially in the manufacturing sector. This would help boost incomes by increasing access to markets, technology, and skills, and increasing the domestic value-added in exports. Ghana’s participation in GVCs remains mostly in commodities, whilst its aspirational peers, Kenya and South Africa have graduated from the commodity group into limited manufacturing group of participants in GVCs.
- Improvement in the efficiency of trade facilitation, requires strengthening customs administration to reduce the costs facing traders and improving the ease of trading across the border. Other trade facilitation improvements include removal of VAT on transit services, and removal of redundant and ineffective checkpoints.
- Recent growth of trade services, as well as increased digitization of the Ghanaian point to the strategic importance of streamlining the regulatory environment for the services sector. Special effort should be made to support the segments of services sector that more dynamic, with potential for innovation and economies of scale. These include services such as business services, professional services, financial services, and IT-enabled economic activities.
- Policy reforms 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 (NTBs), improvement in trade facilitation, as well as promoting a favorable business and investment climate.
“Ghana 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, adds Daniel Boakye, co-Author “However, more needs to be done to remove the obstacles to trade flow in Ghana.
