Private sector proactivity essential for AfCFTA's achievements

Firing up African Economies: The Private Sector's Game-Changing Moment

The private sector's initiative to capitalize on the economic opportunities presented by the African Continental Free Trade Area (AfCFTA) is a pivotal factor in the program's success, according to South Africa's High Commissioner to Ghana, Grace Mason.

This move propels investment-driven expansion on the continent, with AfCFTA offering a goldmine of opportunities for African nations to uplift a staggering 30 million people out of extreme poverty and boost the income of an additional 68 million individuals living below $5.50 per day (World Bank estimates if implemented successfully).

The implementation strategy encompasses trade-enabling measures that streamline customs procedures and bureaucracy, paving the way for much-needed reforms essential for reinforcing long-term growth across African countries.

Speaking at the Brand South Africa Business Roundtable in Accra, Ambassador Mason emphasized the importance of businesses' participation in the Guided Trade Initiative (GTI), a pilot venture designed to accelerate trading between nations and examine operational, institutional, and legal environments under the AfCFTA.

"The AfCFTA is gaining momentum, with important milestones such as the launch and implementation of the Pan African Payment and Settlement System, the adoption of key protocols on investment, competition, and intellectual property rights, which are vital for investor confidence and protection," she said.

South African Investments in Ghana

According to the Ghana Investment Promotion Centre (GIPC), the nation attracted a staggering $2.6 billion in foreign direct investments in 2020 alone. Among these investments, South African companies contributed a notable $242 million, demonstrating the confidence South African investors hold in Ghana's favorable business climate.

Apart from the capital infused in 2020, South African companies have undertaken over 170 projects in Ghana worth a collective $1.4 billion over the past decade—employing approximately 19,087 Ghanaians and 510 expatriates [GIPC data]. Notable investments include ONIX Data Centre (over $25 million), Ocean Basket, and Roco Mamas.

Power of Branding and Investments

Brand South Africa's Acting Manager of Research, Shamiso Hlatshwayo, highlighted the role of branding in fostering investment growth.

"Effective branding bolsters a country's appeal in the eyes of investors, paving the way for business expansion and increased product consumption. For instance, Ghana's 'Year of Return' initiative has significantly shifted the world's perception of the nation," she said.

Persisting as a Prime Investment Destination

GIPC's Deputy designation, Yaw Amoateng Afriyie, called on South African investors to retain Ghana as a top investment destination despite the prevailing challenges, assuring that the nation is committed to reducing barriers and improving the environment for trading and investing in Ghana.

Economic Integration and Africa's Potential

When private sector entities across the continent take the lead in embracing the AfCFTA, they help dismantle historical trade barriers—encouraging businesses, particularly SMEs, to scale operations beyond commodity exports and shift towards value-added products. This industrial growth not only fosters job creation but also promotes economic progress throughout Africa.

Supportive policies and financial mechanisms, such as trade finance and credit insurance, are crucial in overcoming barriers to exporting and investment. These tools, provided by governments, regional bodies, export credit agencies, and organizations like ATIDI, reduce transaction costs and enhance access to financing for SMEs, consequently driving intra-African trade and bolstering business expansion.

In addition, clearer legal and financial frameworks will ensure a stable and fair trade and investment climate, bolstering investor confidence and driving economic integration across Africa. This environment encourages foreign investment and contributes to the continent's further industrial growth.

With the proactive engagement of the private sector, African countries can capitalize on AfCFTA's economic potential, transforming the region into a thriving hub for investment and job creation.

The private sector's participation in the Guided Trade Initiative, as emphasized by South Africa's High Commissioner to Ghana, Grace Mason, is vital in accelerating trading among nations under the African Continental Free Trade Area (AfCFTA).
In 2020 alone, South African companies contributed $242 million in foreign direct investments to Ghana, demonstrating their confidence in Ghana's favorable business climate, according to the Ghana Investment Promotion Centre (GIPC).
Effective branding, as highlighted by Brand South Africa's Acting Manager of Research, Shamiso Hlatshwayo, bolsters a country's appeal in the eyes of investors, paving the way for business expansion and increased product consumption, such as Ghana's 'Year of Return' initiative.
Supportive policies and financial mechanisms, such as trade finance and credit insurance, are essential in overcoming barriers to exporting and investment, fostering intra-African trade, and driving business expansion, as stated by Yaw Amoateng Afriyie, the Deputy designation of GIPC.