The Association of Ghana Industries (AGI), believes some challenges exist in preventing Small and Medium Enterprises (SMEs) from fully enjoying the privileges of the African Continental Free Trade Area (AfCTFA).
The Greater Accra Regional Chair of the AGI, Tsonam Cleanse Akpeloo indicates the AfCFTA agreement only creates winners and losers, with SMEs being the latter because they are not ready to export.
Although these challenges exist for the SMEs, he insists they can be overcome.
Addressing these challenges and how they can be overcome for SMEs to also benefit from AfCTFA in the Happy Dialogue Series on the topic; ‘Understanding the relevance of AfCFTA for Ghana and Industry Players’ with Don Kwabena Prah, host of Happy98.9FM’s Epa Hoa Daben show, he questioned the production capacity of SMEs.
“Do we have the local capacity to produce and export? Most of the businesses in Ghana are SMEs and are unable to produce for the local market and that means we are not ready for the AfCFTA market yet,” he noted.
He however indicated that the SMEs can come together “and unify their small units of production to produce and export. This is a way we can take advantage of the AfCFTA initiative if we can’t make the SMEs work together as a collective, then we need to increase the capacity of our SMEs to export. Other countries are waiting to export to Ghana and if we wait before starting this, it can be dangerous.”
With the change and revision of policy direction considered a priority by the AGI, Tsonam Cleanse Akpeloo called on the government to recognize the cost component of power in the production process for SMEs. “Cost of power in Ghana is high and about 30 percent of production cost of manufacturers goes into power. The government of Ghana has surprisingly subsidized the cost of power for residential areas and not the industrial areas but this has to be revised. Industries should benefit from these power subsidies so the cost of production can be drastically reduced for Ghana to produce for the African market.”
With the policy rate for loans in Ghana being 13 percent, the lending rate of commercial banks are however pecked at 25 percent per annum which is considered to be high and unfair. The AGI Accra Chair said the gap between the policy and interest rate is actually high and cannot compare to other African countries with interest rates as low as 10 percent. “We need to look at this too for SMEs to be competitive and ready for the AfCFTA.”
Tsonam Cleanse Akpeloo pointed out that access to funds is also a problem for SMEs as most of them do not have the collateral “and this prevents them from growing. We have to set up a specialized fund targeting AfCFTA trade so SMEs can benefit from that.”
He believes Ghana’s economy can only grow if it increases its export levels and champions the implementation of the aforementioned to grow Ghana’s economy and also for the country to immensely benefit from the continental free trade agreement.
By: Joel Sanco
