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SA, Ghana must push AfCFTA to improve trade

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President Cyril Ramaphosa officiates at the launch of South Africa’s first shipment under the African Continental Free Trade Area (AfCFTA) at the Port of Durban on January 31, 2024. – Picture: GCIS

By Sizo Nkala

President Nana Akufo-Addo of Ghana arrived in South Africa this week for a working visit during which he co-chaired the second session of the South Africa-Ghana Bi-National Commission (BNC) with his counterpart President Cyril Ramaphosa.

The first session of the BNC was held in 2021 in Accra, Ghana, when Ramaphosa visited the country. During that session, the two countries signed various memoranda of understanding in different areas, including agriculture, trade and investment.

In his remarks at the session, Ramaphosa expressed his government’s willingness to work with Ghana under the auspices of the African Union (AU) to address the challenges facing the Continent such as conflict and instability, the erosion of democracy, and economic hardships.

He said there was a need for both countries to expedite the implementation of the 24 co-operation agreements signed since 2021.

President Cyril Ramaphosa and Ghanaian President Nana Addo Dankwa Akufo-Addo. Ramaphosa noted on Tuesday March 12, 2024 the important relationship South Africa has with Ghana. Picture: GCIS

Ramaphosa further said that the revoking of visa requirements for ordinary passport holders for three months between Ghana and South Africa had increased the movement of people between their countries.

He lamented that trade between Ghana and South Africa had been declining in the last four years but expressed hope that the implementation of the African Continental Free Trade Area (AfCFTA), would open trade pathways and help revive trade ties between the two countries.

In his remarks, Akufo-Addo was hopeful that the relations between South Africa and Ghana would grow from strength to strength, as witnessed by the signing of new agreements on health, education and mining following the latest BNC session.

As part of efforts to deepen relations, Akufo-Addo revealed that the two countries were exploring opportunities for political consultation on international and regional issues. Ghana and South Africa share a lot in common which can be marshalled to form a strong foundation for their relations.

Both countries are exemplary democracies in a continent that is facing rapid erosion of democratic values.

Ghana and South Africa are two of the few countries in Africa that have been designated as free by the Freedom House index because of their respect for political and civil rights.

It is important for South Africa and Ghana to tap into their shared democratic values and collaborate in pushing back against the recent scourge of military coups that have mainly affected West Africa.

As the two countries prepare for their respective national elections this year, many across the Continent will be hoping that they continue to be good role models.

The two countries’ economic relations have the potential to grow. According to the Department of International Relations and Co-operation (Dirco), there are more than 100 South African companies operating in various sectors including banking, mining and telecommunications.

Over the last decade, South African companies have invested $1.4 billion (about R26 bn) in Ghana which was spread over 170 projects which have led to the employment of hundreds of Ghanaian citizens.

Trade between the two countries remains modest. In 2022, South Africa exported goods worth $417 million to Ghana, while the latter exported $124m worth of merchandise to South Africa.

South Africa enjoys a huge trade surplus of almost $300m.

As the size of South Africa’s economy is more than five times that of Ghana, such a huge surplus is not surprising.

While the value of bilateral trade has increased significantly from 1995 when it was only $52.9m, there is still room for improvement.

Ghana’s export basket to South Africa is dominated by crude petroleum, reflecting its commodity-based economy, while South Africa’s export basket is dominated by nitrogenous fertilisers, delivery trucks and hot-rolled iron bars.

The modest levels of trade between the two countries are structural and reflect the lack of inter-regional hard and soft infrastructure to facilitate the movement of goods, capital and people between West Africa and Southern Africa.

These structural bottlenecks have been put under the spotlight with the launch of the AfCFTA in 2021, which is all the more reason why the two countries must tirelessly push for its full implementation to realise their economic potential.

South Africa sent its first exports to Ghana on January 31 this year, under the AfCFTA terms and conditions. The consignment included forged grinding balls and high chrome grinding media products used in the platinum, energy and cement industries among others.

This gesture was befitting as Ghana is the host of the AfCFTA Secretariat headquarters and has played an important role in keeping the free trade area on the continental agenda.

With two deep-water ports on the west coast along the Atlantic Ocean and enjoying relative peace and stability in a troubled region, Ghana has the potential to be South Africa’s gateway to the big West African market.

Dr Sizo Nkala is a Research Fellow at the University of Johannesburg’s Centre for Africa-China Studies