Why the EU should keep watching post-Covid Ghana

The contrast between Ghana’s economy and those of the West raises arguments for the economic stability that trade agreements provide.

In March 2020, Ghanaian President Nana Akufo-Addo said, “We know how to revive the economy. What we don’t know is how to bring people back to life. And while almost no country in the world has been able to completely avoid civilian deaths, Ghana has been able to deliver on its promise to sustain its economy.

Throughout the Covid-19 pandemic, panic has spread around the world, leading to shortages of common household products, supplies and medicines. Although this was a disadvantage in much of the developed world, it was a potentially existential threat to countries in the developing world and some developed countries with weakened trade agreements.

How has Ghana reversed the regional and global trend? Ghana’s participation in the African Continental Free Trade Agreement has enhanced the country’s economic integration in the region. The UN Economic Commission for Africa has estimated that it expects intra-African trade to increase by 52% by 2022. Bearing regional importance, Ghana holds the title of “Permanent Secretariat” of the Zone of African Continental Free Trade Agreement (AfCFTA).

Anchoring in the global economy was another key element thanks to the trade relationship with the European Union. The EU-Ghana Economic Partnership Agreement (EPA) was a big part of this. The EPA grants Ghanaian products duty-free access to the EU market, and in response Ghana began reducing tariffs on EU imports in 2020, gradually reducing its tariffs to zero for 78 % of its imports from the EU by 2029.

Smart European companies will take note

The EPA is a crucial element of Ghana’s development, both for exports and imports, and it anchors Ghana in the international economy as a trusted trading partner. This will continue to create better opportunities for EU companies to trade and invest in Ghana – and forward-thinking European companies would be wise to take note.

However, the AfCFTA and the APE are only part of the story. Technology is the other. Ghana is a key hub for African start-ups and continues to raise more funds from international investors. Ghanaian fintech start-up Float has just raised US$17 million and aims to capitalize on the exponential growth of the African fintech ecosystem.

As the international economy plunged into a recession with Covid regulations underscoring the fragility of trade, travel and travel, developed countries like the UK saw a 9.7% decline in GDP.

In contrast, Ghana’s economy grew by 0.4% in 2020 and while the world was still mired in Covid, it recorded an increase of 6.6% in 2021. This shows exceptional resilience in the face of total global destabilization; at times when uncertainty poses a threat to trade.

While most of the headlines related to the impact of Covid on Africa depict dire situations, Ghana’s story is starkly different. What we can see is that while the measures put in place in Ghana in 2020 to minimize the spread of Covid-19 have inevitably reduced business activity in the country, they have not derailed it.

As in most countries around the world, shutdowns in major cities, rising shipping costs and reduced commodity exports have hurt the economy. But that was not a fundamental policy reversal of fiscal milestones achieved in the pre-pandemic period. It’s a very different story for many countries in the region and around the world, which continue to scramble stimulus plans.

On the other hand, many developed countries, particularly in Western Europe, have been left with empty supermarket shelves, staff shortages and sluggish economies at a time dominated by the breakdown in EU-UK trade relations.

Post-Covid Africa is not just catastrophic

The rollback of free trade evident in the developed world, but particularly in the UK, US and EU, has proven to be detrimental to all and proving equally perilous in times of crisis.

Highlighted by the effects of Covid, the contrast between Ghana’s economy and those of the West raises arguments for the economic stability that trade agreements provide, and the extent to which they protect them.

The European single market must be protected, because every day European governments pass laws that can undermine it, but reinforced by a network of international trade agreements such as the EPA. The EU should continue to strive to build relationships with strong international markets that open doors to new business opportunities.

A financial snapshot provided by the World Bank in 2021 positions Ghana as a country with an optimistic economic recovery from the pandemic. The international financial institution projects that Ghana will continue its gradual recovery over the medium term by bringing its GDP back to pre-pandemic levels by 2023 and reducing its fiscal deficit between 2021 and 2023.

Thanks to its position as the hub of the AfCFTA and a key player in the EPA, the International Monetary Fund has even ranked Ghana as the fastest growing economy in Africa. Supporting figures show that over the past 20 years, Ghana’s GDP has increased eightfold, equivalent to €52.2 billion.

Clearly, post-Covid Africa is not all dark and gloomy. As Africa’s largest gold producer and West Africa’s second largest economy, Ghana’s story is very different.

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