Question

The 18th Ordinary Session of the Assembly of Heads of State and Government of the African Union, held in Addis Ababa, Ethiopia in January 2012, adopted a decision to establish a Continental Free Trade Area by an indicative date of 2017. The Agreement Establishing the African Continental Free Trade Agreement (AfCFTA) entered into force on 30 May 2019 for the 24 countries that had deposited their instruments of ratification.

The AfCFTA will bring together all 55-member states of the African Union covering a market of more than 1.2 billion people, including a growing middle class, and a combined gross domestic product (GDP) of more than US$3.4 trillion. In terms of numbers of participating countries, the AfCFTA will be the world’s largest free trade area since the formation of the World Trade Organization. The main objectives of the AfCFTA are to create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Customs Union.

From the above,

1) discuss three (3) advantages that Ghana as a member of AfCFTA may get by signing the agreement

2)two (2) disadvantages that Ghana may suffer from AfCFTA.

Answer 1

Answer: The African Continental Free Trade Area (AfCFTA) is one of the world's largest Free Trade Agreement that has allowed member countries to remove tariff barriers and  thereafter allow member countries to free flow of goods and services across them which allows their economic progress and stability in economic activities. The agreement proved beneficial for many members of the AfCFTA with Ghana being a front player as well.

Ghana being a continuous developing country with having huge international export share in Cocoa and Gold market has particularly benefitted from the AfCFTA.

• Advantages that Ghana may get from the African Continental Free Trade Area (AfCFTA) are:

(i) Ghana has been one of the biggest exporter of Cocoa and Gold in the world will see a huge increase in exports of these specific products which will thene further boost the GDP growth rate which is already increasing at a rate of 6% per annum.

(ii) Poverty and unemployment still prevails in parts of the country and the Free Trade Area will give an overall boost to the economic conditions as well as demand for more manpower is likely to increase which in turn will increase employment opportunities and imrove the standard of living for the people.

(iii) The AfCFTA will bring in substantital boost to the manufacturing sector in the country although being a West African country the exports of the country are mostly extractive in nature like gold and oil. But as a result of implementing the AfCFTA other industries and manufacturers products will have lower tarrifs imposed on them which in turn will increase their exports.

• Disadvantages that might arise from the  African Continental Free Trade Area (AfCFTA) for Ghana are:

(i) Reduce tarrifs and free flow of substantial products will lead to an overall decrease in the government tax revenues which will in turn impact the countries infrastructural development. The government might need substantial spending capacity to able to develop the nation and improve the economic status.

(ii) Moreoever, due to higher free flow of goods from Ghana as well in Ghana might lead to an extensive competiton for the local producers and they might be left behind in competing with import quality goods that can lead to discouragement and unexpected shutdowns.