Ghana’s merchandise trade competitiveness declined over the last decade, resulting in a reduction in the number of exporting firms and their participation in Global Value Chains (GVCs),bringing to mind the question , can Ghana Can Leverage Trade Policies to Accelerate Export Diversification and Economic Transformation for Jobs ? Improvements in transport logistics and access to ICT infrastructure over last decade can be leveraged for expanded trade and economic transformation; a key pathway to the creation quality jobs, says the World Bank’s latest trade analysis for the country. The newly released Ghana Trade Competitiveness Diagnostic- Strengthening Ghana’s Trade Competitiveness in the Context of AfCFTA, notes that trade in services and foreign direct investments are also important for ensuring deeper integration into GVCs and efficiency of the manufacturing sector. “The potential benefit offered by the AfCFTA (about 0.5% additional GDP growth per annum over next ten years) – is very significant, says Pierre Laporte, World Bank Country Director for Ghana, Liberia and Sierra Leone “This should motivate Ghana to harness the transformative potential of trade by cultivating export-oriented activities in both manufacturing and services and following up with the outstanding negotiations and implementation of the AfCFTA protocols.” The report lays out four main policy recommendations and conclusions for strengthening trade competitiveness in the context of AfCFTA. To enhance s participation in GVCs, Ghana needs to strengthen its trade competitiveness, particularly that of the manufacturing sector, promote inflows of foreign direct investment, and deepen its regional integration efforts into regional markets and global value chains, especially in the manufacturing sector. This would help boost incomes by increasing access to markets, technology, and skills, and increasing the domestic value-added in exports. Ghana’s participation in GVCs remains mostly in commodities, whilst its aspirational peers, Kenya and South Africa have graduated from the commodity group into limited manufacturing group of participants in GVCs. Improvement in the efficiency of trade facilitation, requires strengthening customs administration to reduce the costs facing traders and improving the ease of trading across the border. Other trade facilitation improvements include removal of VAT on transit services, and removal of redundant and ineffective checkpoints. Recent growth of trade services, as well as increased digitization of the Ghanaian point to the strategic importance of streamlining the regulatory environment for the services sector. Special effort should be made to support the segments of services sector that more dynamic, with potential for innovation and economies of scale. These include services such as business services, professional services, financial services, and IT-enabled economic activities. Policy reforms are necessary to take advantage of the potential opportunities offered by AfCFTA and GVCs. These include, reducing tariffs where appropriate -such as reduction of tariffs on imported raw materials, eliminating non-tariff barriers (NTBs), improvement in trade facilitation, as well as promoting a favorable business and investment climate. “Ghana is well positioned to leverage trade in services, including logistics services, foreign direct investment and trade policy to consolidate the country’s comparative advantage as a hub for business and financial services in the West Africa sub-region, adds Daniel Boakye, co-Author “However, more needs to be done to remove the obstacles to trade flow in Ghana.
ECommerce is growing in Ghana. As elsewhere, the pandemic accelerated the adoption of eCommerce and delivery services. This includes the online purchase of restaurant and other takeout food, as well as the online purchase of consumer goods (beauty and health), clothes, and electronics. Ghana has approximately 15 million internet users who are buying online every day. Leading local eCommerce platforms include Hubtel, Jumia, Plendify, Jiji, as well as Uber Eats and Bolt Food. Ghanaian customers also order goods from Amazon for delivery to U.S. locations that then use discount express couriers to ship goods to Ghana more cost effectively. ECommerce in Ghana is supported by the robust, relatively affordable mobile data access provided by telecom operators MTN, AirtelTIGO, Glo, and Vodafone. (Additionally, T-Mobile plans with Simple Global offer unlimited free data and text as well as voice for a per minute fee with no roaming charges in Ghana). There are approximately 40 million mobile phone connections and six million active social media users. Many of these are young people between the ages of 16 and 35. About 79 percent of users online have a smart phone, and they spend an average of three hours online daily. According to Hootsuite, social media ads, followed by television, are the top way consumers discover new brands in Ghana. Instagram, Facebook, and Twitter, in rank order, are the primary social media channels that local companies use to drive customers to company websites or to linked Shopify accounts. B2B Sales: B2B eCommerce sales of industrial inputs or advanced machinery, for example, is underdeveloped in Ghana. Customers still purchase these goods primarily based on word-of-mouth or recommendations from professional contacts. Alibaba and AliExpress are used by some local companies, but concerns about scams on these platforms remain. U.S. companies that can employ effective search engine optimization so that their equipment or products can be found in Ghana may gain the attention of B2B buyers. (Some foreign competitors maintain dedicated sites with “Ghana” in the title for this purpose.) Further, Ghana is a very price sensitive market. Sites that can calculate shipping charges to Ghana will also help local companies to understand the full cost of the transaction, facilitating the sale. WhatsApp is a primary mode of communication. Providing WhatsApp or other free communication channels on websites so that Ghanaian buyers can ask questions about product specifications, for example, could be helpful to get an edge, as well. In terms of digital payments, some local banks do offer classic credit cards to their clients, including Mastercard and Visa. However, mobile money and debit payments such as those offered by Emergent, TechHustle, Vodafone, and MTN, are more widely used by consumers. As a result, eCommerce payment platforms should allow for a wide range of payment options beyond just major credit cards. (PayPal is not an option in Ghana.) Recognizing that intra-Africa trade is likely to expand in the future, U.S. and local companies are starting to develop multi-market/intra-African eCommerce and payments platforms such as Mastercard’s DPO Store. Policy and technology challenges: For eCommerce to be solidified, Ghana needs to develop a consumer protection framework that sets out the responsibilities of both buyers and sellers. Key challenges include last mile delivery and the verification of digital identities.
