Make the most of the opportunities AfCFTA presents- private sector urged

International and local business players are pointing to the African Continental Free Trade Area (AfCFTA) as one of the potential biggest breaks for local businesses. 

David Ofosu-Dorte (Senior Partner, AB& David), Michael Kottoh (Executive Director, AfroChampions) and Tony Oteng Gyasi (CEO, Tropical Cable and Conductor Ltd) made these remarks at the 7^th edition of Crystal Ball Africa, held in Accra on January 16, 2020.

Sharing their investment notes on Africa, they explained that the AfCFTA presents extraordinary opportunities for the private sector to transform the continent by investing in infrastructure and industries to increase intra-Africa trade and create wealth.

The African Continental Free Trade Area (AfCFTA) seeks the progressive elimination of tariffs on 90 per cent of products within 5–15 years depending on the economic status of each participating country, and the liberalisation of even more tariffs on other “sensitive goods” within 10–13 years.

The agreement also aims to remove non-tariff barriers through the creation of a single market of about 1.2 billion persons for the trading in goods and services. If fully implemented, the AfCFTA is estimated by IHS Markit to contribute to a 32 per cent increase in total trade in goods between its members and trade between AfCFTA countries that do not currently share an FTA would also increase from $13 billion to $32.5 billion. 

Regional trade in Africa remains low despite efforts by African Governments to boost intra-regional trade. Since 2010, only about 12 per cent of Africa’s total trade took place within the continent, according to the United Nations Conference on Trade and Development (UNCTAD). One of the major reasons for the weakness in the continent’s regional trade performance has been the lack of a private sector that is dynamic and vibrant enough to seize existing opportunities in the trading system.

Challenges the African private sector face include high and rising informality, small size of enterprises, weak inter-firm linkages, low level of export competitiveness and low innovation capabilities. These challenges are compounded by the fact that regional integration initiatives aimed at promoting trade tend to focus on processes, such as the removal of trade barriers, without the commensurate attention to the building of productive capacities and private sector development that would effectively address the consequent weaknesses. There is certainly a need to shift away from this linear and process-based approach towards a greater development focus, international trade and investments experts have argued.

R-L: Catherine Krobeh Edusei (MD, Edentree Ltd), Tony Oteng-Gyasi (CEO, Tropical Cable & Conductor Ltd), Engr. Mansur Ahmed (Prez, Manufacturers Assoc, Nigeria), Samuel Appenteng (MD, Joissam Gh. Ltd) and Nick Opoku (moderator). 

The private sector has a crucial role to play in making regional integration work for Africa because, though trade agreements are signed by governments, it is the private sector that understands the constraints facing enterprises and is in a position to take advantage of the opportunities created by such agreements and regional trade initiatives.

Some indicators of core opportunity areas (current and future)

1.      Feeding the People

- Africa’s annual food import bill is $35 billion

- Africa’s annual food important bill is estimated to reach $110 billion per annum by 2025

- Agriculture represents 15% of the continent’s GDP, or more than $100 billion annually

- Africa’s total urban food market is estimated to reach $150 billion by 2030

- Agribusiness sector is estimated at $1 trillion by 2030

- Africa’s financial needs for irrigation is up to $65 billion investment in irrigation in suitable areas in sub-Saharan Africa (from 5% to 15% total cultivate area)

- The total smallholder financing need for Agriculture in Africa is estimated at $450 billion

2.      Clothing the People

-          1.6 billion people will need clothing by 2030

3.      Moving people and goods

-          $200 billion worth of trade in Africa is carried by the region’s trunk road network

-          Africa’s aviation sector contributes $72.5 billion to economy

4.      Telecommunication

-          Broadband connections in Africa by 2022 projected to be 1.07 billion broadband

-          Africa’s smartphone market penetration by 2035 projected to be 636 million

5.      Manufacturing  and Value-addition

-          Business-to-business spending in manufacturing in Africa is projected to reach $666.3 billion by 2030

-          African manufacturing output by 2025 if all 55 countries join AfCFTA estimated at $1 trillion

6.      Tourism and creative industries

-          By 2030, consumer spending on tourism, hospitality and recreation in Africa is projected to reach about $261.77 billion

7.      Education, Skills and healthcare

-          Africa has a financing gap of 40 billion to achieve the SDGs for education by 2030

-          Africa’s pharmaceutical market is estimated to be worth $160 billion by 2024

-          Business opportunities in the health care and wellness sector in Africa will reach $259 billion by 2030

8.      Financial services

-          Africa’s Central banks hold more than $400 billion in international reserves.

-          Africa’s banking market is approximately $86 billion in revenues before risk cost

9.      Housing the People

Crystal Ball Africa is an annual pan-African business forum organized by AB& David for business people and professionals currently doing or seeking to do business in Africa where advance knowledge on key policies, legislations and other related matters that will impact businesses in the year is/are shared. This year’s event held at the Labadi Beach Hotel, Accra, was on the theme: ‘The AfCFTA and business without borders: the game changer’. The programme was moderated by Nick Opoku and Bernard Avle.

Credit: Additional files from AB& David and the AfroChampions Initiative

The annual celebration of the 31st December Coup: a case of gross impunity?

By: Nick Opoku and Kwadwo Yeboah Gyan

Photo Credit: Getty Images

1. On 31st December 1981, the government of Ghana was overthrown by the PNDC. The PNDC subsequently made 31st December a statutory public holiday and celebrated the anniversary of the coup each year with public funds.

2. On 7th January 1993, a civilian government assumed power under the 1992 constitution. But the celebration of the 31st December coup with public funds continued.

3. The NPP went to the Supreme Court arguing that the celebration of 31st December with public funds is unconstitutional because it's against the letter and Spirit of the 1992 constitution.

4. The Supreme Court agreed with the NPP (See New Patriotic Party v Attorney General [1993-94] 2 GLR 35—192). The court held amongst others that because the 1992 constitution enjoins Ghanaians to defend and resist any attempt to overthrow the constitution, the celebration of the 31st December coup with public funds weakens the resolve of Ghanaians to defend and protect the constitution. It is also unfair to persons adversely affected by the coup but are unable to seek redress because of the Transitional provisions. Therefore using public funds for the celebration of the 31st December coup is unjustified and unconstitutional.

5. My friend, the venerable Prof Stephen Kwaku Asare (Kwaku Azar) argues that despite the perceived non-use of 'public funds' for the celebration of the 31st December coup, the continuous organization of the event by a political party makes it a 'national' event and therefore must be subject to the rule in the 31st December case. He argues that it is against 'our collective conscience and wisdom' to allow the continuous celebration of the event because it poses a danger to our peace and democracy.

6. One may argue that the right to join a political party in the celebration of the 31st December coup is a right protected by the constitution. I am mindful of these rights: rights/ freedoms of assembly, to participate in the activities of political parties, etc under Article 21. But we must note that these rights are subject to 'such qualifications and laws as are necessary in a free and democratic Society'. The exercise of these rights must also be 'consistent with [the] Constitution.'.

8. To the extent that the Supreme Court held that the celebration of the 31st December coup weakens/ will weaken the resolve of Ghanaians to defend and protect the constitution and such celebration will be unfair to persons adversely affected by the coup but are unable to seek redress because of the Transitional provisions which protect perpetrators of the coup from being 'held liable either jointly or severally' for their actions or omissions, I agree with Prof Kwaku Asare’s argument.  

9. One may also argue that the funds of a political party (NDC) used in the celebration of the 31st December coup are not ‘public funds’ and therefore the celebration is not unconstitutional. But let us note that the funds of political parties are considered public funds. The Supreme Court in Republic v Yebi and Avalifo [2000] GLR (also [2000] SCGLR) said so. The court in that case held, amongst others, that ‘the alleged theft of the money [of the NDC] is not in the interest of only the members of the NDC, but also the entire Ghanaian public who are by law entitled to inspect and take copies of the audited accounts of the NDC.’ A person who appropriates the funds of a political party is liable to punishment under our criminal laws.

10. It stands to reason, therefore, that the NDC's continuous use of its resources to celebrate the 31st December coup is an unconstitutionality.

11. For now, we can only trade ideas and debate this issue until it is tested in our courts someday.

Guest Blogger: Books win corruption fight in Ghana

By: Samson Lardy Anyenini

Government has put ¢12.2 billion in our pockets between 2017 and now. Never mind that this, in fact, is money we gave to government or loans taken on account of our tax. The finance minister just explained this was money spent on various projects to benefit citizens. More than this amount, some ¢13 billion, was spent on the banking sector clean-up. I hope I understood the minister.

This could have been avoided if people blew the whistle on the alleged regulatory breaches that officers of the central bank superintended to cost the taxpayer so much. Imagine if citizens were educated the Whistleblowers law guarantees them 10% of the money recovered or substantial financial reward upon the successful prosecution of corrupt people and public officers fleecing the country?

We have spent a couple of years begging China for $2 billion we will pay for. This brings excitement that it will be used to transform Ghana’s infrastructure. But it is estimated that the country loses $3 billion each year to grand corruption – that’s twice the aid money we get.  So this country can do far better and without borrowing. Citizens in Tamale were extremely excited when the NCCE took a rare whistleblowing awareness campaign to them this week.

They had their suspicion that very little is heard of this law because as they say “if you want to hide something from the Ghanaian put it in a book. This law establishes 18 different avenues including EOCO, BNI, the police, CHRAJ, heads of institutions, religious leaders, chiefs and district assemblies for citizens to report impropriety and corruption. They were not excited when I disclosed that the 2006 law requires the establishment of a Whistleblowers Reward Fund which has not been put in place.

It is out of this fund that one may get the 10% reward and refund of any expenses he makes in exposing corruption. If you blew the whistle and got victimised, harassed, mistreated or dismissed at work, you simply report to CHRAJ and you will get justice, get your job back, compensated and you and your family will receive state protection if your security is threatened. Yes, after two decades of the campaign, the RTI law was passed but curiously suspended to commence operation next year.

This is another book that wins the corruption fight. But a couple of months to 2020 and there is no word about the implementing agency – the RTI Commission established by the law, and almost all items on a roadmap for a smooth take-off have been missed. Ghana has many fine anti-corruption laws including one that has no history of application even though it recovers three times the money stolen from the state plus a possible 10 years in jail – the Government Contracts (Protection) Act, 1979.

The procurement law and another recent book, the Special Prosecutor’s law have all won the corruption fight but on paper. Laws don’t work by themselves. Enough of the book corruption victories!  Enough of the grandstanding lip service fight against the nation-wrecking graft and sleaze?

Experts make recommendations for the sustainable development of mining communities

Experts in the extractive sector have made recommendations for the sustainable development of local communities that play host to mining activities in Ghana.

Government of Ghana must:

        I.            Implement fully the 2014 Minerals and Mining Policy of Ghana, and the 2016 Minerals Development Fund Act(MDF). 

    II.            Develop a long-term plan integrating mining into a wider vision of a diversified high-income, high-wage economy.  

 III.            Make Community Benefits Agreements (CBAs) a mandatory, legally binding obligation for all large-scale mining operations.

 IV.            Re-orient CBAs towards building local governance capacity rather than provision of public infrastructure and public services. 

    V.            Implement fully the 2016 Minerals Develop Fund (MDF), especially the 20% allocated to the Community Development Scheme (CDS).

 VI.            Track MDF funding to ensure the proper usage of funds. Institute periodic audits of all MDF channels and beneficiaries including District Assemblies and traditional authorities.

VII.            Strengthen the mining fiscal regime (royalties and taxes).

VIII.            Strengthen environmental regulations; ensure that the Environmental Protection Agency (EPA) is well resourced; adopt a continual monitoring system for environmental indicators at all mine sites.

 IX.            Develop a national policy and strategy to ensure that women participate in and benefit from mining.

    X.            Close skills/training gap in mining. Mining sector should be seen as a vehicle for technology, skill, and management transfer (from multinationals) for the long-term goal of building local capacity. 

 XI.            Address CBA governance deficits – enhance responsibility, accountability and transparency of CBAs, and enhance community representation and participation in CBA decision-making.

XII.            Communities should participate in CBAs with help from knowledgeable officials from the national/local governments through deliberate and ongoing consultation to identify priorities that are in the common interest and part of a long-term development plan.

XIII.            Adopt international best practices by providing guidelines for mandatory CBAs, obtaining Free and Prior Informed Consent of communities for projects, and for community-oriented independent M&E.

XIV.            Create a socioeconomic baseline for M&E in each community to see how mining is affecting the general welfare.

XV.            M&E frameworks for CBAs should include both quantitative and qualitative data, and incorporate participatory methods.

XVI.            Clear and publicly available indicators and targets are a must to assess and demonstrate progress.

XVII.            All CBA projects should undergo due diligence regarding procurement and hiring.

XVIII.            Build local capacity for M&E by neutral 3^rd parties trusted by the community and paid out of general funds, rather than the mining co., to avoid the appearance of conflicts of interest. 

XIX.            Give mining communities better access to legal representation to defend their rights.

The experts including Dr. James Busumtwi-Sam (Associate Professor of Political Science at Simon Fraser University), Dr. Steve Manteaw (Co-chair, Extractive Industries Transparency Initiative-EITI), Dr. Tony Aubynn (Former CEO of the Minerals Commission, President & Chief Policy Analyst, Africa Institute for Extractive Industries) and Mr. Albert Buer (GSBPLs Communities Supt., Golden Star Resources Ltd) made these recommendations at a multi-stakeholder forum organized by the World University Service of Canada (WUSC) and the Canadian High Commission at the Alisa Hotel on November 20, 2019 on the topic: ‘Mining Social License and the Community Benefits Agreements Approach: What Prospects for Ghana’. 

High Commissioner of Canada to Ghana, Sabine Nolke

The programme was moderated by Nick Opoku, a communications consultant.

 

Community Benefits Agreements (CBAs)

Community Benefits Agreements (CBAs) are becoming increasingly popular within the mining sector around the world. They provide opportunities for ensuring that mining contributes to the sustainable development of local communities that play host to mining activities. CBAs typically contain undertakings regarding the socio-economic contributions that a project will make to the community. Issues addressed through CBAs include employment opportunities for members of the community, educational scholarship, apprenticeship and technical training programmes for members of the community, support programmes for micro enterprises within the community, financial and other forms of contributory support for infrastructural development such as health, roads, power, water and sanitation. 

In some countries such as Sierra Leone, South Sudan and Nigeria, CBAs are required by law, but in Ghana they are voluntary. In South Sudan, Section 80(1)(c) of the 2012 Mining Act explicitly regards the conclusion of a CBA between a large-scale mining license title holder and a community as a precondition to the commencement of mining operations. It is subject to the approval of the Minister of Mines and once approved, is regarded as a public document accessible to the public. Also, in Nigeria, the conclusion of a CBA in accordance with the Nigerian Minerals and Mining Act 2007 is a pre-requisite for the commencement of mining operations by a license holder.

Stats on mining in Ghana

-          Ghana has substantial mineral resources.  Gold, diamonds, manganese, and bauxite are the major minerals mined. Also, unexploited deposits of iron ore, copper, chrome, nickel, limestone, quartz, and mica.

-          Mining in Ghana was valued at US$38.65 billion in 2014. Its contribution to GDP increased from 2% in 1991 to 9.6% in 2015. 

-          Minerals are the leading merchandise export, accounting for 45.5% of the total in 2016, compared with 22.3% for cocoa, and 12.5% for crude oil.

-          Export of gold (96.5% in 2016) is the largest share of mineral exports. 

-          Despite being a major source of export earnings and a significant contributor to GDP, mining (large scale) does not contribute significantly to employment in Ghana: Agric- (44.7%); Services (40.9%); Industry (13.4%); Mining (-1%)

-          An estimated 10,503 people (-1% ) were formally employed in large-scale mining as of 2017 (GCM 2018). Indicative of the capital-intensive nature of large-scale mining. 

-          About 20 large-scale mining companies with investment from Australia, Canada, South Africa, and the United States dominate the sector with lesser investors from the UK, Norway, and China.

Credit: Additional files from Dr. James Busumtwi-Sam