Leveraging Trade Policy Reforms to Diversify and Transform Ghana for Better Jobs

Accra, June 9, 2022 - 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). There were however improvements in transport logistics and access to ICT infrastructure, which can be leveraged for expanded trade and economic transformation; a key pathway to produce quality jobs, says the World Bank’s latest trade analysis for the country.

“Ghana’s trade in services on the other hand quadrupled in value and doubled its contribution to GDP between 2010 and 2019, says Pierre Laporte World Bank Director for Ghana, Liberia and Sierra Leone “Despite this achievement, Ghana remains a net importer of services, between 2010-2019, Ghana’s trade in services grew from 14 to 35 percent of GDP.”

The report notes that, trade policies are an essential enabler of economic growth, job creation, and poverty reduction for developed as well as developing countries such as Ghana. Trade provides new market opportunities for domestic firms, stronger productivity, and innovation through competition.

The report acknowledges that achieving sustaining growth and poverty reduction in Ghana remains a challenge, because of continued reliance on a few primary commodities for exports. After nearly a decade of strong growth fueled by oil discoveries and the boom in commodity prices, Ghana’s economy remains largely undiversified, with three commodities (gold, cocoa, and petroleum) accounting for more than 75 percent of total exports.

The report identifies that Ghana has the potential to promote export diversification and higher value addition for good quality jobs by pursuing the following trade policy reforms;

• Strengthening the country’s trade competitiveness, will lead to reducing tariffs, eliminating non-tariff barriers, and improving the competitiveness of Ghanaian firms and attracting more Foreign Direct Investors than its comparators.
• Enhancing the regulatory environment of services trade, will help spur the growth of trade services, as well as the IT-enabled industries. It will facilitate trade and more broadly the growth of key services sectors. A preliminary analysis of Ghana’s trade restrictiveness shows that though Ghana’s regime is already relatively liberalized, the dynamic segments of the services sector that are open to innovation and economies, of scale such business services, financial services and IT-enable services could do better.
• Deepening integration into global value chains (GVCs), can increase the pace of industrialization in Ghana through increased access to markets as well as the percentage increase in the share of value-added exports especially in the manufacturing sector. It would also help to boost incomes by increasing access to markets, improving access to technology and skills, and increasing the domestic value-added in exports.
• The promotion of intra-Africa trade, as envisaged under the AfCFTA would almost double Ghana’s trade with regional partners. The share of African countries in Ghana’s exports would increase by 6 percentage points, and the share of African countries in imports by 12 percentage points, compared to a baseline forecast without AfCFTA. It also would encourage greater foreign investment in Ghana, to serve the regional market and an expanded domestic market

“Trade expansion and integration into the global economy have historically been central to creating new, higher-productivity jobs that facilitate growth through structural transformation, says Daniel Boakye, World Bank Economist and co-author” The launching of the Africa Continental Free Trade Agreement (AfCFTA) in 2020, therefore provides impetus to Ghana’s trade development agenda in terms of increased market access and increased valued-added exports.”