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Weak macroeconomic environment may undermine AfCFTA implementation — BoG governor

BY: Elizabeth Nyaadu Adu
Samuel Ato Yeboah (left), an international trade expert addressing participants in the meeting

The Governor of the Bank of Ghana (BoG), Dr Ernest Addison, has stressed the need for African central banks to pursue a prudent macroeconomic management supported by growth-oriented policies to ensure a successful implementation of the African Continental Free Trade Area (AfCFTA).

He said high inflation, volatile domestic currencies and weak financial systems were likely to undermine the goals of AfCFTA, hence the need for central banks to focus on addressing such challenges within the AfCFTA framework.

Dr Addison made the call in a speech read on his behalf at the third Public Public Dialogue (PPD) held in Accra on November 23.

Organised by CUTS International in collaboration with GIZ, the event was held on the theme: “Creating SME Competitive Advantage for AfCFTA: the Strategic Role of Trade Finance.

The event brought together key players in the trade sector and financial institutions to deliberate on the necessary requirements for SMEs finance to enable them to increase their production capacity, innovate, market, meet certification standards, research and develop new products to fulfil the demands of the growing market and AfCFTA .

Dr Addison said; “For instance, in Ghana, the Bank of Ghana has deployed Inflation Targeting (IT) as the monetary policy framework to anchor inflation expectations which will be critical to the stability of prices of goods and services in a free trade area.

“At this point, let me reiterate that BoG remains committed to fighting and bringing inflation under control while taking measures to stem the slide in the Ghana cedi”.

The Governor said the role of financial intermediaries could not be overemphasised in the promotion of inter-continental trade in Africa.

To fully support the AfCFTA, he said African central banks must ensure stable and resilient financial systems of member countries.

“This should engender financial stability, a prerequisite for stable macroeconomic growth. There is no doubt that central banks in the continent have major roles to play in achieving these goals.

“The much needed actions should be directed to building stronger balance sheets of financial institutions, cleaning assets with the financial systems and ensuring collaborative supervisory and regulatory frameworks,” he said.

Access to finance

In his presentation, an international trade expert, Samuel Ato Yeboah, said access to finance still remained a challenge for small and medium enterprises (SMEs).

He said the capability for SMEs to produce to maximise their potential was very key but that could not be done without finance.

“Financial institutions must create a competitive lending landscape in Ghana where businesses can borrow to expand their capacity to boost their productivity and make locally made products more competitive to meet international standards,” he said.

For his part, the Head of Business Advisory Service at Exim Bank Ltd., Frank Obeng, explained that mismanagement and character were some constraints to access to finance by SMEs.

He advised SMEs to play their part in access to finance by having good intentions and accounting well for their finances.