BoG’s latest statistical bulletin for Q1 2021 reveals reduced trade between Ghana and the rest of Africa, which explains in part the likelihood that Ghanaian businesses are still not ‘awake’ to AfCFTA.
This suggests that Ghanaian MSMEs have not fully taken advantage of the African Continental free Trade Area (AfCFTA) after its launch on January 1, 2021. Trade within this context, if not to boom immediately was expected to gradually improve, but the reverse is rather the case.
Compared with Q1 2020, Ghana’s exports to the rest of Africa declined by 2.0 percentage points from 13.3 per cent to 11.3 per cent in Q1 2021. Imports also declined by 1.0 percentage point from 5.2 per cent to 4.2 per cent.
In effect, this brings to question the readiness of businesses to trade with the rest of Africa in such an accelerated fashion, months after signing the pact to ensure limited barriers at borders- high tariffs, long laborious paper works, among others. But also, quite mildly, this decline in trade may be attributed to the border restrictions that were still in place in a host of countries in the region as a means of controlling the spread of the COVID-19 pandemic.
Destination of Exports
According to available data, the country’s major export destination is the European Union which received the largest share (30.9 per cent, 2.7pp increase) of Ghana’s total exports. Other European Countries accounted for 20.9 per cent (a 3.4pp increase), 18.8 per cent of total exports entered countries in the Far East (countries in East Asia and South East Asia), followed by 11.3 per cent for the rest of Africa.
Moreover, export to its West African peers reached only 6.5 per cent, while other Economies and North America obtained 6.4 per cent and 5.4 per cent respectively.
With regards to imports, the Far East emerged as the leading source of imports, accounting for 42.8 per cent (6.6pp increase) of total imports. The European Union followed with a share of 23.3 per cent, North America (12.8%, a 1.9pp increase), Other Economies (8.8%, a 2.1pp increase), Other Europe (5.1%), Rest of Africa (4.2%, a 1.0pp decline), and ECOWAS (3.0%, a 3.3pp) decline.
Source of imports
Overall, the country experienced a trade surplus, which declined compared to same period in the previous year. Particularly, the trade surplus declined to US$0.62 billion in Q1 2021 from US$0.85 billion in Q1 2020. According to the Bank of Ghana, “the decline in the trade surplus were attributable to a pick-up in imports as the economy began to recover from the COVID-19 pandemic.”
Specifically, merchandise exports for Q1 2021 was provisionally estimated at US$3.9 billion showed a 1.4 per cent increase compared to that of 2020 (US$3.89 billion) recorded in the same period.
These notwithstanding, gold exports saw a decline from US$1.47 billion in 2020 to US$1.38 billion in 2021. The decline in gold exports was as a result of a reduction in volume exported. The volume of gold exported decreased by 17.9 per cent to 766,811 ounces, whilst the average realized price increased by 13.9 per cent to settle at US$1,796.94 per fine ounce.
Crude oil exports improved as price of the commodity shot up considerably in Q1 2021 compared to same in Q1 2020. The value of crude oil exported reached US$0.84 billion compared to US$789.96 million. However, due to cut in production of oil by OPEC+ countries, this affected the volume of exports.
Also, earnings from cocoa beans and products exports increased to about US$1 billion as compared to US$0.98 billion for the same period in 2020, representing an increase of 3.3 percent.
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