Ghana lags behind several of the top countries signed into the African Continental Free Trade Agreement when it comes to efficient capability in the manufacturing sector, according to Konfidants‘ new survey, Ghana’s Competitive Potential in the AfCFTA: A Country Competitiveness and Opportunity Assessment.
“Ghana’s efficient capability (Labour Quality & Skills Availability and Innovation & Production Potential Utilization) corresponds poorly to several of the leading countries in the AfCFTA,” Konfidants said, reiterating a previous World Bank study on Ghana’s stagnant manufacturing sector and its effect on the industry sector. Ghana’s overall effective potential score out of a possible 10 is 4.75, according to data calculated from the World Bank Enterprise Surveys along the above-mentioned metrics, slipping below half of the total score and below the average performance for the top African countries”.
The paper, which was released in March 2021, comes almost three months after the start of the African Continental Free Trade Area (AfCFTA), a trade agreement between 54 African countries that has the ability to increase intra-African trade by 52.3 percent by removing import tariffs.
Free flow of products and services is also permitted under the deal.
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Although the Ghanaian government hopes that local companies can take full advantage of the deal to expand their operations, the study reveals that the country’s failure to provide its businesses with the required raw materials, as well as its unwillingness to provide a reliable supply of energy, has led to other African countries gaining a competitive edge over Ghana.
“Among the 12 frontier economies, Ghanaian companies are the second most reliant on international inputs…
Electrical outages cost Ghanaian businesses about 17% of annual output, relative to 10% on average for frontier competitors.”
While the prospects offered by AfCFTA are limitless, the study advises that the government strive to reduce the country’s reliance on international input, among other items.
“The government should encourage and affiliate companies in the same market or commodity sector to co-invest in setting up local firms to manufacture the inputs and intermediate goods for them locally.”
It also urged the government to ensure that local businesses have access to inexpensive energy so that they can fully benefit from the country’s industrial expansion.
“Government must strive to reduce Ghana’s high cost of power to a goal of 5 cents per kilowatt-hour for strategic industries under the government’s Industrial Transformation Agenda, the Ghana Export Development Strategy, and related AfCFTA focus industries,” according to the Konfidants survey.
Source: CITINEWSROOM
