Currently, the industry is the second contributor to the country’s Gross Domestic Product (GDP) which stands at 34.5% as of the end of the third quarter of 2020.
The AfCFTA presents that golden opportunity needed to champion the government’s industrialization agenda which has the potential to create employment opportunities for the youth, increase income levels, generate foreign exchange, develop local infrastructure and ultimately promote growth that translates into better living conditions and a general reduction in the level of poverty in the country.
The sub-sectors’ of the industry which comprises Mining and Quarrying; Oil & Gas; Manufacturing; Electricity; Water Supply, Sewerage, Waste Management & Remediation Activities; and Construction hold the greatest growth potentials for the country but are currently under-exploited.
The preferential treatment to be enjoyed by African products under the African Continental Free Trade Area (AfCFTA) presents an avenue for the Ghanaian manufacturing companies to expand their production capacities which perfectly dovetail into the government’s agenda of making Ghana an industrial hub in Africa.
“One of the strategic goals of this government is to make Ghana the new industrial hub for Africa. I am sure you are all aware that the government has embarked on a very comprehensive program for industrial transformation; the 1D1F initiative which seeks to bring industrialization to the doorsteps of every Ghanaian and particularly in our rural communities.
“We are looking at developing a petrochemical industry, an automotive and vehicle assembly industry. We will go into industrial chemicals. We are going to aggressively pursue a program in garments and textiles. In pharmaceuticals, in the manufacturing of machinery and equipment” .
Alan Kyerematen
However, for the industrial sector of Ghana to benefit from the current trade agreement, the government should “aggressively pursue” programs that allow local manufacturing industries to expand their production capacities through the provision of infrastructure such as good roads and markets as well as a constant supply of power.
The government should create that enabling environment for players in the industry sector using policies that are favourable to local manufacturers.
For instance, tax holidays and waivers that are mostly given to large companies can be reduced and used as subsidies for all manufacturing firms irrespective of their sizes to encourage local manufacturers to produce enough to feed the domestic and the African market.
Due to the forward and backward linkages between industry and the other sectors; agriculture and services, the Planting for Food & Jobs (PFJ) initiative as well as other agriculture-enchantment policies should continue to remain a priority of the government because agriculture normally provides the raw materials needed for most of the industries.
Without a sound and resilient agriculture sector, we can only promote a fragile and uncompetitive industrial sector.
The AfCFTA which requires member states to remove tariffs from about 90% of goods will encourage easy access to commodities across Africa. According to the United Nations Economic Commission for Africa, by 2022, this agreement will increase intra-African trade by over 52%.
Currently, intra-Africa trade is limited to 15% of Africa’s total trade, indicating that the intra-regional value chain is very weak in contrast to Asia, where it stands at 61% and in Europe with 67%, according to the UNCTAD.
“The outcome of the AfCFTA will depend on whether African countries embrace industrialization and focus on increasing their production capabilities in a highly competitive global landscape” .
Arkebe Oqubay, Senior Minister and Special Adviser to the Prime Minister of Ethiopia.
The statistics show that only countries that can industrialize stand the chance of benefiting immensely from the AfCFTA. Despite trade tensions across the globe, Africa stands the chance to become the next industrialization hub in the world.
“A focus on industrial goods promotes African industrialization and the advancement of its manufacturing sector, providing more employment opportunities for the continent’s booming youth population. If fully implemented, AfCFTA could unlock significant growth opportunities, particularly for countries that are better placed to reap the rewards of intra-regional trade” .
Dr. Mukhisa Kituyi, Secretary-General of UNCTAD.
A question that begs for answers is whether Ghana is better placed to reap the rewards of intra-regional trade?
The AfCFTA provides the opportunity for Africa to create the world’s largest free trade area, with the potential to unite more than 1.2 billion people, in a $2.5 trillion economic bloc and usher in a new era of development.
