It would be naive for indigenous businesses, particularly Small and Medium-scale Enterprises (SMEs), to assume that they can adopt an indifferent approach to the African Continental Free Trade Area (AfCFTA), as there would be implications – economic and otherwise – whether individual businesses choose to participate or not, Chief Executive Officer (CEO) of the Association of Ghana Industries (AGI), Seth Twum Akwaboah, has said.
Sounding the note of caution, Mr. Akwaboah stated that the very nature of the arrangement – which allows for largely tariff-free movement of goods and services across the continent – ensures that even if businesses choose not to export, there would be added competition from imports, and this could erode whatever existing market share these businesses already have.
“What many of our businesses must come to understand is that even for the small business, as we say, ‘in your corner somewhere’ is going to be impacted as they are all part of the Area; part of it in the sense that even when they are not exporting at all, their market is going to be competed in your own backyard because we are opening our doors to other markets,” he said to the B&FT on the sidelines of the launch of the 10th edition of the AGI Industry and Quality Awards.
With studies, including one conducted by advisory firm, Konfidants, revealing that only 18% of goods in 23 product categories sold in some of the top-tier retail outlets in the country being locally manufactured, he urged businesses not to act like the proverbial ostrich. “When we look at our shops, even outside the city centers, we see a high number of imported items on our shelves. We must be awake to this reality.”
Quality and aggregation
The CEO of AGI, however, stated that it is not all gloom and doom. On the contrary, he said that the nation is well placed, amongst its peers, to be a leader across the trade spectrum on the continent, owing to its existing trade structures and aggressive adoption of technology.
He indicated that further success, particularly for small businesses, would hinge largely on their adhering to standards of quality, as well as forming strategic alliances across various sectors.
“From the packaging to the content, the labelling and everything in between, quality is non-negotiable. In as much as we have access to other markets, we must realise that if we fail in adhering to standards, that could easily be used to prevent our products from entering these markets. If we are to have that competitive edge, we must insist on and ensure quality.”
Additionally, he said: “Naturally, our bigger businesses are better placed for the export market. But then, many of our SMEs are doing quite well. There is, however, the challenge of capacity for some of them. That is why we as the AGI advocate for the aggregation of small enterprises and their products; where bigger enterprises with the reach organise smaller businesses, pull their resources together and share the production and the returns.”