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AfCFTA remains key for Ghana’s industrialization renaissance – StanChart

Source The Ghana Report

Standard Chartered has underscored the transformative potential of the African Continental Free Trade Area (AfCFTA) for Ghana’s manufacturing sector and the broader African economy.

Speaking to a gathering of industry leaders at the 8th Ghana CEO Summit, Mr. Xorse Godzi, Head Client Coverage, Corporate and Investment Banking at Standard Chartered highlighted how AfCFTA could serve as a catalyst for economic growth, market expansion, and regional integration.

In an address, titled ‘Reigniting Business Growth under AfCFTA,’ he painted a vivid picture of the opportunities presented by the trade agreement.

He described AfCFTA as an unparalleled opportunity to “transform our economies and stimulate growth across Africa and more importantly transform our manufacturing sector in Ghana.”

He further emphasised the significance of this moment in Africa’s economic history, noting the historical context of the African Union’s founding vision for a unified and economically powerful continent.

The AfCFTA, which came into effect in 2018 and is headquartered in Accra, aims to create the world’s largest free trade area, encompassing 1.3 billion people and eliminating tariffs on 90 percent of goods.

According to the banker, this agreement “signals a new dawn in the African business landscape,” opening up vast new markets and creating numerous opportunities for Ghanaian manufacturers.

Key highlights from Mr. Godzi’s address included insights from the Standard Chartered Future of Trade Report, which provided data and projections on AfCFTA’s impact. He highlighted three primary opportunities for Ghanaian businesses: market expansion, supply chain optimization, and innovation and investment.

“With the reduction of tariffs and non-tariff barriers removed – significant bottlenecks in intra-continental trade – Ghanaian goods will now be found in new markets,” he stated.

He explained that this would allow businesses to scale operations, diversify product lines, and engage in cross-border trade more efficiently.

One of the most compelling aspects of AfCFTA, according to Mr. Godzi, is its potential to drive innovation through increased competition.

“As we go out in search of new customers, so will our competitors. By so doing, we will witness an increase in foreign direct investment with investors seeking to capitalise on the new trade environment,” he said.

This influx of investment is expected to bring capital, technology, and expertise, bolstering Ghana’s manufacturing capabilities.

The Standard Chartered report projects significant growth in intra-African trade flows, with East and West Africa expected to see increases of 15.1 percent and 13.2 percent, respectively, far outpacing the global average of 4.2 percent.

The Standard Chartered representative noted, “According to our research, by 2035, total African exports are expected to reach close to $1 trillion, and a well-implemented AfCFTA can boost this figure even higher by 29 percent.”

Despite the promising opportunities, he acknowledged the challenges that lie ahead. He stressed the importance of improving infrastructure, standardizing payment systems, and harmonizing regulations across the continent. “Africa’s challenges require trade policies that strike a balance between national industrialisation objectives and the formation of regional value chains,” he said.

Mr. Godzi also highlighted the need for investment in education and vocational training to build a skilled workforce capable of meeting the demands of modern manufacturing. He called on business leaders to adopt new technologies, explore new markets, and foster a broader continental mindset to fully capitalize on AfCFTA’s potential.

“Everything rises and falls on leadership,” he remarked, urging CEOs and Business leaders to leverage their influence with governments to create a conducive regulatory environment for business.

“The business leader of 2024 should be prepared to lead the charge if their businesses are to go beyond the shores of Ghana.”

With its commitment to supporting businesses under AfCFTA, Standard Chartered Bank stands ready to collaborate with clients, stakeholders, and policymakers to realize the opportunities presented by the trade agreement.

“We have insights and knowledge of the local markets and are well positioned to be a connector bank for our clients,” Mr. Godzi said, reaffirming the bank’s role in Africa’s economic development.

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