The introduction of the African Continental Free Trade Area (AfCFTA) in March 2018 was aimed at creating a single market for Africa as well as ensuring the free movement of goods and services on the continent.
This free movement of goods and services will help expand the Intra-African trade. What this means is that goods will be sold at a relatively cheaper price because of the increase in production which will, in turn, create both direct and indirect jobs for the teeming unemployed youth.
The free trade area also provides traders and/or importers an opportunity to stay competitive.
Businesses when conducted in a free and safe environment will help reduce poverty in member states as well as create sustainable development.
Though transparency, harmonization and alignment are the pillars of trade facilitation in the ECOWAS sub-region, these pillars are however shaken sometimes despite their benefits.
GhanaWeb in this article brings to bear some of the factors serving as hindrances in intra-African trade.
High cost of doing business
Many businesses have over the years bemoaned the high cost of doing business in Africa. Cost of raw materials and other essentials needed to boost work has shot up due to inflation in various countries of which Ghana is no exception.
This also affects the cost of duty on goods and services. In Ghana, many business owners have attributed their low production to access to cheaper credit from financial institutions. They opined that these loans help facilitate trading activities.
Lack of trade infrastructure
The issue of poor road networks to transport goods from one African country to the other remains one of the significant challenges traders face on the continent.
Unavailability of railways and storage systems to store goods produced on a large scale serves as a hindrance to trade in the ECOWAS sub-region.
Absence of common currency
In Africa, there is no common currency used across borders. It would be recalled that ECOWAS announced a single currency [Eco] for the sub-region. In December 2019, the leaders adopted “EC” as the symbol for the currency to be used in 15 countries namely, Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo.
It is expected that ECOWAS will launch the Eco currency in 2027.
Language barrier
The inability to speak and decode the diverse languages that member states have hindered trade facilitation. Traders, most times, can not express themselves freely to engage in the selling of goods and services.
Corruption
Mounting of unnecessary checkpoints to extort traders of their monies before crossing to other borders to trade. This sometimes leads to harassment of traders, especially women.
Political instability
Political instability in various countries affects intra-African trade and the free flow of goods and services.
Traders, and investors will be scared to involve in any trading activities in these conflict-prone countries.
For Ghana and other African countries to trade successfully without any impediment, the aforementioned challenges need to be tackled.
By: Ernestina Serwaa Asante
ESA/FNOQ
The AfCFTA Secretariat in Accra, Ghana