The World Bank has urged Ghana to strengthen its trade competitiveness, particularly that of the manufacturing sector, to enhance its participation in the Global Value Chains (GVCs).
The Bretton Woods Institution also called for the promotion of foreign direct investment inflows in addition to deeper regional integration efforts into regional markets and global value chains, especially in the manufacturing sector.
According to the World Bank, this would help boost incomes by increasing access to markets, technology, and skills, and increasing the domestic value-added in exports.
Ghana’s participation in GVCs remains mostly in commodities, whilst its aspirational peers, Kenya and South Africa have graduated from the commodity group into limited manufacturing group of participants in GVCs, the World Bank stated.
“Improvement in the efficiency of trade facilitation, requires strengthening customs administration to reduce the costs facing traders and improving the ease of trading across the border. Other trade facilitation improvements include removal of VAT on transit services, and removal of redundant and ineffective checkpoints”.
World Bank
Recent growth of trade services, as well as increased digitization of the Ghanaian point to the strategic importance of streamlining the regulatory environment for the services sector.
As such, the World Bank indicated that special effort should be made to support the segments of the services sector that are more dynamic, with potential for innovation and economies of scale. These include services such as business services, professional services, financial services, and IT-enabled economic activities.
As part of policy recommendations for strengthening Ghana’s trade competitiveness in the context of AfCFTA, the World Bank stated in a recent trade analysis report that policy reforms are necessary to take advantage of the potential opportunities offered by AfCFTA and GVCs.
These include, reducing tariffs where appropriate, such as reduction of tariffs on imported raw materials, eliminating non-tariff barriers (NTBs), improvement in trade facilitation, as well as promoting a favorable business and investment climate.
Decline in merchandise trade competitiveness
Ghana’s merchandise trade competitiveness declined over the last decade, resulting in a reduction in the number of exporting firms and their participation in Global Value Chains (GVCs).
However, improvements in transport logistics and access to ICT infrastructure over last decade can be leveraged for expanded trade and economic transformation; a key pathway to the creation of quality jobs, the World Bank stated in its latest trade analysis for the country.
The report highlighted that trade in services and foreign direct investments are also important for ensuring deeper integration into GVCs and efficiency of the manufacturing sector.
“The potential benefit offered by the AfCFTA (about 0.5% additional GDP growth per annum over next ten years) – is very significant. This should motivate Ghana to harness the transformative potential of trade by cultivating export-oriented activities in both manufacturing and services and following up with the outstanding negotiations and implementation of the AfCFTA protocols”.
Pierre Laporte, World Bank Country Director for Ghana, Liberia and Sierra Leone
Daniel Boakye, co-Author of the report, said Ghana is well positioned to leverage trade in services, including logistics services, foreign direct investment and trade policy to consolidate the country’s comparative advantage as a hub for business and financial services in the West Africa sub-region. However, he noted that more needs to be done to remove the obstacles to trade flow in Ghana.
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