Collaborate to reduce cost of trading under AFCFTA - Ghanaian SMEs urged

The West African Regional Director of CUTS International, Mr. Appiah Kusi Adomako, has urged Ghanaian SMEs to collaborate and build partnerships to reduce the cost of exporting and trading within the African Continental Free Trade Area.

Speaking at a public-private dialogue organized by CUTS International with support from Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) in Accra, Mr. Adomako said Ghanaian SMEs face logistical challenges in trading.

These challenges include the high cost of freight, unmotorable roads, and the non-existence of rail lines on the continent.

This, according to him, makes it almost impossible for SMEs to trade under the AfCFTA.

“SMEs that deal in the same goods should consider coming together so they can save on production and export costs under the AfCFTA,” he said.

He further reiterated the importance of stakeholder collaboration to address the issue of trade logistics.

“AfCFTA will not become successful if we do not address the issue of trade logistics, but this is something that the government alone cannot do; it involves the private sector too. We need to decolonize trade logistics, and Africans must own and operate shipping lines that can facilitate trade. Governments must provide the enabling framework to allow for organic growth in trade infrastructure,” he said.

He, however, noted that “it is when the government creates the enabling framework that the private sector will be able to take advantage of it.”

In his remarks, Dr. Fareed Arthur, the National Coordinator for Ghana’s AfCFTA Coordination Office, revealed that a 2023 African Development Bank report showed that about 53 percent of roads on the continent were tarred, though they carried 80 percent of goods and 90 percent of passenger traffic. Also, railways, many of which were developed during the colonial period, have not been maintained properly and were not designed to support the transport of goods for intra-African trade.

He said the AfDB report also showed that only 13 African countries had direct flights to some 20 neighbouring countries, with about five percent of passenger and cargo aircraft out of the 230 airlines operating in Africa. Mr. Adomako encouraged African governments to increase the pace of connecting road networks, ensuring favorable shipment, and having carriers that would facilitate the movement of people and goods.

On his path, Dr. Stephen Amoah, a Deputy Finance Minister, articulated the government’s readiness to partner with value chain stakeholders to solve logistical challenges in the country. Such collaboration, Dr. Amoah said, would be critical in making small and medium-sized enterprises (SMEs) thrive in the country while boosting their participation in the African Continental Free Trade Area (AfCFTA).

The Deputy Finance Minister stated that deepening efforts to invest heavily in logistics infrastructure would also help businesses in neighbouring African countries trade easily and quickly with Ghana.

He therefore called on all stakeholders to pool their energies and resources and push for a common cause of enhancing an extremely efficient and effective logistics system that will support businesses in growing sustainably.

Dr. Amoah noted that while logistical facilitation of trade between two countries elsewhere was often seamless, the situation was different among many African countries.

He stated that “now, more than ever, it has become necessary for all stakeholders to come together for Ghana to open a new chapter in prioritizing logistical infrastructure development.

“Finance, agriculture, and trade are very key, but you can’t have a successful trade without an efficient and effective logistics management system, and we’re ready to support the private sector as a government,” Dr. Amoah said.

He also encouraged businesses, policy think tanks, and academia to increase collaboration with the government to build a logistical system devoid of leakages and corruption.

Ms. Sofia Kamarudeen, Ghana Component Lead, GIZ Programme Support to the AfCFTA, stated that the idea of the dialogue was to delve deeper into logistics and present a strong recommendation to the government to help solve the challenges.

“We’re committed to this topic, which is a long-term, ambitious project for Africa. We will continue to support institutions to create more platforms, which will further boost the logistics sector and the progress made towards that,” she said.

The dialogue was held under the theme “Making Logistics Work for Ghanaian SMEs to Trade Under the African Continental Free Trade Area.”