The AfCFTA currently covers 54 out of the 55 African countries. It has a total population of 1.3 billion and a combined Gross Domestic Product (GDP) of US$ 3.4 trillion. The agreement establishing the African Continental Free Trade Area was signed on 21st March 2018, in Kigali, Rwanda. The agreement entered into force on 30th May, 2019.
Some objectives of AfCFTA are as follows;
a. Create a single market for goods and services, facilitated by movement of persons in order to deepen the economic integration of the African continent;
b. Create a free market for goods and services through successive rounds of negotiations;
c. Contribute to the movement of capital and natural persons and facilitate investments building in State Parties;
d. Lay the foundation for the establishment of a Continental Customs Union at a later stage;
e. Promote and attain sustainable an inclusive socio-economic development, gender equally and structural transformation of the State Parties,
f. Enhance the competitiveness of the economies of State Parties;
g. Promote industrial development through diversification regional value chain development, agricultural development and food security; and
h. Resolve the challenges of multiple and overlapping memberships and expedite regional and continental integration processes.
The following are some way in which AfCFTA can benefit Ghana and other African countries;
a. It will boost intra-African trade by eliminating tariffs on goods originating from Africa.
b. It is expected to increase Africa's income by USD$450 Billion by 2035, a gain of 7% and increase volume of total African exports by 19%';
c. The AfCFTA has the potential to lift 30 million people out of extreme poverty?
d. It will increase employment for Ghanaian farmers, agro-processors, youth, women and cross-border traders.
e. It will enable small and medium-sized enterprises in Ghana to grow because of the expanded market size.
f. It will ensure that Ghanaian companies operating in Africa enjoy better terms of trade, and have favorable market access to other African markets.
g. It will enable Ghanaian companies to develop regional value chains; by forming partnerships with other African firms.
h. It will enable Ghanaian companies to take advantage of economies of scale and become more competitive.
To become a member, African Countries are expected to sign the Agreement and deposit their instrument of ratification with the African Union Commission (AUC). Although 54 out of 55 African countries have signed the Agreement, only those who have ratified and deposited their instrument with the AUC are eligible to participate as State Parties in AfCFTA. As at December, 2022, 44 countries have ratified the Agreement. Ghana is a state party of the AfCFTA. Ghana and Kenya were the first countries to ratify the agreement and both deposited their instruments of ratification on 10th May, 2018.
Ghanaians seeking to export under AfCFTA will have to meet two (2) main conditions;
- Goods must comply AfCFTA Rules of Origin.
- Goods must be in the liberalized tariff schedule of the destination country.
In addition, all existing export documentation and procedures must be complied with. These include;
a. Acquiring televant Licenses, Permits, Certificates and Others (LPCO);
b. Completing Pre-shipment Procedures; and
c. Creating Bill of Entry (BOE) and a Customs inspection.
The GRA - Customs Division is appointed as the competent Authority for the issuance of the AfCFTA Certificate of Origin. Ghanaian companies can obtain the AfCFTA Certificate of Origin by first applying online directly or through an agent to Customs (www.external.unipassghana.com).
Some of the benefits of AfCFTA to Ghanaian Small and Medium-Sized Enterprises (SMEs)are;
a. The AfCFTA provides SMEs access to a wider African market at favourable tariff rates.
b. Ghanaian SMEs can grow by expanding their production capacity and diversifying their products to satisfy the demands of the African market.
c. SMEs can partner with other producers in Africa and become part of regional value chains across the continent. For instance, Ghanaian SMEs can provide raw materials or semi-processed inputs for goods manufactured in Nigeria or Burkina Faso or vice versa.
Some institutional structures that are in place to support Ghanaian business harness the benefits of AfCFTA are;
a. Inter-Ministerial Facilitation Committee; made up of selected Ministers, to provide policy oversight for government participation.
b. National AfCFTA Steering Committee; provides technical inputs and oversight for development of national policies and implementation of national strategies for Boosting Trade with Africa.
c. National AfCFTA Coordination Office; Coordinate the day-to-day implementation of Ghana's AfCFTA strategy.
d. Technical Working Groups (TWGs) on the eight (8) clusters for Boosting intra-African Trade namely -
•Trade Policy
•Trade Facilitation
•Enhancing Productive Capacity (industrialization)
•Trade-related Infrastructure (e.g. Transportation and Communication),
•Trade Development and Finance
•Trade Information
• Factor Market Integration, and
•Trade in Services.
As a Regional Economic Community, ECOWAS covers 16 countries, mainly in the West African sub-region. The ETLS applies to these 16 ECOWAS member states only.
The AfCFTA is a continental trading bloc and covers 54 out of the 55 member states of the African Union.
This means that when the AfCFTA is fully functional, stakeholders in the member states can freely trade with all the other member states that have signed up.
Both of them are governed by protocols defining the conditions for trade, which include; the Rules of Origin and the Tariff Schedules. In the case of AfCFTA however, ECOWAS negotiated the tariff schedules as a bloc.
The AfCFTA also has clear systems for Dispute settlement which is not the case with ECOWAS.
All goods and products falling within State Parties' tariff offers may be imported or exported under AfCFTA preferential tariffs in compliance with the Rules of Origin. For the list of qualified products, visit www.external.unipassghana.com For ECOWAS countries, the duties on liberalized goods will be progressively reduced over a period of 10 years, starting from 2021. For other countries, the period may range from 5-10 years. The Protocol on Trade in Services (currently under negotiations) will cover the following five (5) priority service sectors:
a. Business Services;
b. Transport and Logistics Services;
c. Financial Services;
d. Communication Services; and
e. Tourism Services.
Customs Posts still remain to perform customs functions and to facilitate trade. Only imports from State Parties that meet the AfCFTA Rules of Origin requirements and Ghana's liberalized tariff schedule will qualify for preferential import tariffs. Goods imported from a non-African country cannot be re-exported to an African country under AfCFTA. Only goods that have been processed to meet the Rules of Origin criteria, can be exported. As such, manufactured products from Ghana containing inputs from non-African countries can be exported to other State Parties provided they meet the criteria set out under the AfCFTA Rules of Origin. All trade agreements entered into by Ghana will continue to be honored by the Government so far as it does not conflict with the AfCFTA. Under the AfCFTA Agreement on Dispute Settled there are robust structures established to deal with trade disputes. Traders may report such disputes to the National AfCTA Coordination Office (NCO) or to the Ministry of Trade and Industry for onward submission to the AfCFTA Secretariat. In cases of default by participating members, the Dispute Settlement Protocol will be activated to find a solution to the issue. In extreme cases, sanctions may be applied to defaulting countries to ensure compliance.
One can get access to Africa's trade information, needed to serve as a guide to potential import/export destinations through the following ways;
a. The operational instrument of AfCFTA includes the African Trade Observatory (ATO) that provides updated and reliable trade information on member state markets.
b. In Ghana, GEPA's (Ghana Export Promotion Authority) Impact Hub can also be a good source of trade information.
c. The NCO is also in the process of developing the Ghana Trade Information Repository (GTIR) which will provide real-time trade information on African markets to Ghanaian businesses seeking to enter other African markets.
The African Export Import Bank (Afreximbank), in collaboration with Member states of the African Union, have developed the Pan-African Payment and Settlement System (PAPSS). This is a centralized payment platform for real-time clearing and settlement of intra-African payments in respective local currencies. The Pan-African Payment and Settlement System is currently operational and Ghanaian banks are signed on through Ghana Interbank Payment and Settlement System (GhIPSS). Recruitments to the AfCFTA Secretariat has already commenced with the appointment of the Secretary-General in February, 2020 and is currently ongoing. Recruitments and mode of application for positions at the AfCFTA Secretariat are advertised online and can be accessed on the AU website at https://careers.au.int/en/jobs