The Executive Director of the Institute of Statistical, Social and Economic Research (ISSER), Professor Peter Quartey has advised Ghanaian businesses, especially banana exporters, to expand their production capacities to take advantage of the recent Ghana-UK Trade Partnership Agreement.
According to him, experiences from previous trade agreements show that Ghana has not been able to take full advantage of the huge markets created under such agreements due to production constraints. On the other hand, the other parties to these agreements are able to expand their production capacities and hence benefit more in such partnerships than Ghana.
“… it’s our inability to penetrate their markets. They have given us the preferential tariff reduction, so we have to expand production and exports. But most often we are not able to take advantage because of our capacity. We are not able to exhaust the market access granted us. These other countries are able to expand their production capacities to take advantage”.
Speaking in an interview with The Vaultz News, the ISSER Boss stated that agreements normally bring positive benefits to both parties but that will depend on how much of Ghana’s exports go to the UK and vice versa.
Prof. Quartey explained that the agreement holds the prospects of bringing some benefits in terms of foreign exchange, create employment, and ultimately help in providing income and livelihood to Ghanaians.
Also, he points out that the current agreement has the potential of boosting our exports which will have an impact on the trade balance depending on how much the country will be able to export. He, however, cautioned local exporters to up their game and not behave similarly as has been done in previous agreements which they could not take advantage of.
Official data show that Britain’s exports to Ghana were worth £722 million in 2019, with imports — primarily oil, fish, cocoa, and fruit — totaling £498 million. Prof. Quartey noted that if this statistic is anything to go by, then Ghana is likely to be at the losing end since it is unable to expand production to take full advantage of the huge market granted us under the agreement.
“You can see they export more to Ghana than we export to their country. If we give them preferential tariffs and they also give us the same, they are more likely to benefit more than we do”.
Before reaching a final agreement with the UK, the African Continental Free Trade Area (AfCFTA) took off on January 1, 2021, which is also expected to provide a huge market for the African continent anchored heavily on the reduction of tariffs.
The ISSER Boss therefore advised local producers to work harder to benefit more from these agreements since competition will be keen.
“They have to enhance their capacity, in terms of packaging, timely delivery, and pricing of products. Otherwise, they will be outcompeted by their competitors in other countries”.
Prof. Quartey also called on the government to support Ghanaian businesses to enhance their capacity, especially through the provision of lower interest rates to enhance cheaper access to credit as well as the reduction in utility costs.
He further admonished the government to set up a special fund to support firms that may be at the losing end due to these trade agreements. He added that the special fund within the AfCFTA should be resourced and made available for local producers.
Failure to do so, he believes will be catastrophic and run counter to the rationale behind the trade agreement as some countries have already provided the necessary ingredients for their businesses to benefit from the trade agreement. More importantly, he noted that the UK has lower interest rates which put them far above Ghana.
“Often time we have production constraints, the market is there but you need capital, but look at our interest rate. So, access to capital is a major constraint. They also complain of utility costs which government must do well to reduce”.
Ghana-UK Trade Partnership Agreement has been finalized under a trade deal worth £1.2 billion with Ghana. This Agreement will provide for duty-free and quota-free access for Ghana to the UK market and preferential tariff reductions for UK exporters to the Ghanaian market.
