Ghana’s overall exports to countries within the African continent have seen a drastic improvement over the past year. This can improve further under the current African Continental Free Trade Area (AfCFTA) area if the country seizes the numerous opportunities presented by this agreement.
The recent Quarterly Bulletin released by the Bank of Ghana shows that the overall exports to African countries in the third quarter of 2020 accounted for 24.7 percent of all merchandise exports as compared with 17.8 percent in the same period in 2019. This was an improvement as the share of exports to Africa in the third quarter of 2018 was also lower at 20.3 percent.
A further breakdown shows that exports to the ‘Rest of Africa’ excluding ECOWAS sub-regional countries accounted for 15.7 percent of total exports whereas countries within the ECOWAS sub-region received 9.0 percent in the third quarter of 2020.
In 2019, exports to the ECOWAS sub-region accounted for 5.5 percent of the overall exports in the third quarter, a decline of 0.1 percent from the 5.6 percent recorded in the corresponding quarter of 2018. Also, exports to the ‘Rest of Africa’ saw a massive improvement between 2018 and 2019. In the third quarters of 2018 and 2019, 14.7 and 12.3 percent of total exports went to the ‘Rest of Africa’ respectively.
Whilst the country’s exports to African countries saw a massive improvement within the review period, imports declined to 9.5 percent in Q3 2020 as compared to 12.1 percent recorded in the same period in 2019. Imports from ECOWAS member countries declined from 8.6 percent in Q3 2019 to 4.0 percent in Q3 2020 but imports from the ‘Rest of Africa’ rose from 3.5 percent in the third quarter of 2019 to 5.5 percent in the corresponding quarter of 2020.
Considering the development of the country’s export destinations in the third quarter of 2020, the ‘Other European’ countries received the largest share of 31.0 percent of Ghana’s total exports. The other recipients were the Far East (20.1%), the European Union (12.3%), Other Economies (10.6%), and North America (1.2%). This shows that the major recipient of Ghana’s exports in the third quarter of 2020 was Europe.
The recent development shows signs of optimism for the country’s trade within the African continent, which is currently very limited, as intra-African trade accounts for 15 percent of Africa’s total trade according to the UNCTAD.
The African Continental Free Trade Area (AfCFTA) which requires member states to remove tariffs from about 90 percent 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 percent.
Thus, Ghana can seize this opportunity to expand its exports to other countries within the African continent under the current trade agreement once tariffs are reduced. This will reduce the cost of imports and exports and will eventually increase the country’s foreign exchange earnings. The country can expand production since raw materials can also be imported at a lower cost under the trade agreement.
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.
READ ALSO: AfCFTA; An Opportunity for Gov’t Industrialization Agenda
