A report by the Ghana Statistical Service (GSS) has indicated that only a quarter of agribusiness firms across the country are aware of the much-talked-about African Continental Free Trade Area (AfCFTA) agreement.
The report comes on the back of a previous report – COVID-19 Business Tracker Survey – released by the GSS in December last year which also revealed that a little over twenty-six (26) per cent of all businesses in the country are aware of the AfCFTA trade pact.
In that survey, awareness of the agreement was predominant among large (72.7 pe cent) and medium scale firms (63.8 per cent).
It was however, non-existent among micro and small-scale enterprises in the country.
This is indicative that the clarion call by government to businesses in the country to get on board and benefit from the many advantages of the trade pact has not been clearly heard by Ghanaian businesses.
The findings of the report are especially worrying in light of the fact that agribusiness has been identified as the industry with the brightest prospects for exporting under AfCFTA. Indeed it has been hoped that the expected surge in processed agricultural products such as foods and beverages; resulting from implementation of government’s one district one factory initiative would translate into a commensurate increase in non-traditional exports of such products under the preferential terms of trade offered under the agreement.
But the report’s findings suggest this may not happen due to lack of widespread knowledge of the opportunities available. Agribusinesses are largely located in per-urban and rural areas, with the latter in particular lacking in enlightenment as to the business opportunities available to them.
Per the report, agribusiness firms in the agriculture sector (31.2%) are firms with the least knowledge about AfCFTA, followed by those in the industry sector (23.9%), and the services sector with 23.2% percent.
According to the June 2021 Summary Report on the Impact of Covid-19 on Agribusinesses in Ghana, agribusiness firms aware of the trade agreement expect six forms of support for their businesses from government in its implementation of the AfCFTA.
The six forms of support noted by the agribusiness firms include; reduced cost of credit, digitization including improved internet connectivity, removing policy/ regulatory bottleneck, formalization including registration, increased information on business opportunities and business advisory services.
Of the six forms of support, the top three supports needed by the agribusinesses are: increase in available information on business opportunities (24.7 percent); reduction innthe cost of credit (20.6 percent) and the removing of policy or regulatory bottlenecks (16.3 percent).
The support needed the least is digitalization, including internet connectivity whichn is only required by 5.5 percent of the agribusinesses polled.
However it now appears that government will have to start at the basics by enlightening agribusinesses on what AfCFTA is, how it works, the opportunities it creates and how they can be exploited, even as it strives to offer support for the enterprises that have already fully appraised themselves of those basics.
Earlier studies by the African Development Bank had earlier warned that competition in the continent’s agricultural industry under AfCFTA would be fierce since many African countries largely offer the same types of agricultural produce. Therefore, market opportunities across the continent will best be exploited by enterprises that can produce processed agricultural products, duly branded, thereby achieving product differentiation from similar goods produced elsewhere.
The current lack of knowledge about AfCFTA among agribusinesses in Ghana also exposes them to unpleasant surprises from the expected substantial increase in competition on local markets from exports originating from other African countries. Here, product pricing adjustments necessary (and economically viable) to fend of competition from other African countries may not be implemented in time to protect current local market share simply because Ghanaian agribusinesses were not expecting such price competitive competition.
The African continent, on the back of the commencement of the African Continental Free Trade Agreement is now the world’s largest free trade area – adjudged by land mass and population, but not by market value – since the formation of the World Trade Organization.
Estimates from the United Nations Economic Commission for Africa (UNECA) suggest that the AfCFTA covering a market of more than 1.2 billion people, with a Gross Domestic Product of US$3,4 trillion, has the potential to boost intra-African trade to 52.3 percent from its current level of barely 12 percent of total foreign trade engaged in by member states.
Meanwhile, the 3-week period-lockdown implemented by government during the height of the pandemic last year, caused the closure of 30.7 percent or 42,396 agribusiness firms in the country.
Of the 42,396 agribusiness firms closed down during the lockdown period, closure of 20.9 percent or 8,860 agribusiness firms were directly due to the lockdown, with the lockdown facilitating or enabling the closure of the remaining 33,536 agribusiness firms.
According to the GSS, an estimated 16,091 agribusiness firms representing 11.6 percent of agribusinesses in the country closed down due to the lockdown, still remained closed after the lifting of the lockdown measures.
Per the report, agribusiness firms in the service and industry sectors were most affected by the lockdown compared with agribusiness firms in the agriculture sector, adding that agribusiness firms in the services sector were however, the first to experience recovery with the most reopened firms.
The closure of agribusinesses in the country due to the impact of the Covid-19 pandemic, the report notes further, resulted in the layoffs of some 51,111 employees, with the number of laid off employees increasing to 78,412 in the post-lockdown period.
Also, workers with reduced wages increased from 175,255 during the lockdown to 267,211 in the post lockdown period.
Source: Goldstreetbusiness