Subsequent to the implementation of the African Continental Free Trade Area (AfCFTA) agreement, revenue derived from international trade is expected to decline by 19 percent to GH¢6.6bn this year.
Last year, taxes on international trade, which earned GH¢8.1bn or 50 percent above the outturn in 2019, were the main driver of non-oil tax revenue. This followed the implementation of the Integrated Customs Management System (ICUMS), which has ensured more efficient management and collection of revenue at the country’s ports.
It is estimated that in 2018, Ghana exported and imported goods to and from the rest of Africa to the value of US$2.5bn and US$1.2bn, respectively. The exports to Africa accounted for 15 percent of Ghana’s total exports, while the imports represented 11 percent of the total.
In an interview at the Ghana National Chamber of Commerce and Industry’s (GNCCI) virtual seminar on the 2021 budget, Dr. Samuel Nii-Noi Ashong, Senior Policy Advisor to the Finance Minister, said: “With the AfCFTA, duties on the intra-African trades have been removed, and this is why we are seeing the decline in the revenue, despite the outstanding performance last year.”
Notwithstanding the revenue loss, government is optimistic that the AfCFTA will enhance its current industrial development agenda, contribute to the diversification of the economy, and open up new market access opportunities under preferential terms for Ghanaian producers, particularly small- and medium-scale firms.
AfCFTA seeks to increase intra-African trade through better harmonisation and coordination of trade within the continent.
The AfCFTA agreement will create the largest free trade area in the world measured by the number of participating countries. The pact will connect 1.3bn people across 55 countries with a combined gross domestic product (GDP) valued at US$3.4tn.