Can John Mahama provide the required leadership to move the needle?

Will the second term of Ngozi Okonjo Iweala help Africa trade development?

Five years after the Africa Continental Free Trade Agreement was reached to establish the largest single trading area in the world, no single trade has taking place yet. It follows that, after five years, its signatories are still negotiating the aspects of tariff concessions, rules of origin, and other issues, according to Visaopeness.org.

It is on the back of this that the Africa Business Convention (ABC) (@AB_Convention), focused on the aggregation and scaling of Africa’s business interests, had its weekly conversation on X spaces on the matter. It follows the emergence of John Mahama as the president elect of the 7^th December presidential election in Ghana. Mahama was one of the signatories to the John Mahama has been declared the winner of the December 7^th presidential election in Ghana. He was President of Ghana from 24 July 2012 to 7 January 2017 and was Vice President of Ghana from January 2009 to July 2021. He was the first head of state of Ghana born after Ghana’s independence. He was elected after the December 2021 election to serve as full time President. He contested re lection for a second term in the 2016 election but lost to the Nana Akufo-Addo.

The X spaces had Dr Josh Bamfo (@DJoshBamfo), head, and partner on transfer pricing at Andersen as one of the guest speakers. Other speakers include Dr. Abimbola Agboluaje, the CEO of WNT Capitas and Babajide Benson (@Babajeeday), a faculty at the Lagos Business School (LBS). Bamfo argued that it is in Ghana’s interest for the new President to push towards implementing the AfCFTA. However, as a small economy in the region compared to Nigeria, and South Africa on the continent, the driver of the implementation of the process falls on these economies. According to him, the best that can be expected from John Mahama is persuasion.

AfCFTA is designed as a preferential trade arrangement to facilitate faster intra Africa trade growth. The expectation is that AfCFTA will eliminate 97 percent of tariffs om intra Africa trade and clear the way for the share of African exports traded within the continent.

However, as the X spaces conversations showed, major challenges remain. The starting point is the lingering structural, political, cultural, and institutional dimensions of the trade challenges on the continent. This has led to a high level of distrust amongst the national governments. Historically, and the pattern remains, African economies trade ties are stronger with the West and East, as they trace their commodities in exchange for largely industrialised goods.

For large economies such as Nigeria, the removal of tariffs may mean three things. First, it may the relocation of companies into neighbouring countries for the purpose of taking advantage of the preferential trade agreement that AfCFTA offers. It may also mean significant loss in trade related taxes, which is still a very significant chunk of government revenues. Third, it may mean loss of jobs to neigbouring economies.

Another dimension is the attraction of capital. In some of the other global trading blocs, the treatment of the movement of capital is less stringent than the movement of goods and migration. However, the movement of capital will have different implications for the Africa trading bloc. The economies with the best and or cheapest labour market will have advantage over those that do not. This is also likely to favour the small economies in the bloc than the large ones.

The X spaces conversation also touched on the recent confirmation of Dr. Ngozi Okonjo Iweala for second term as the Director General of the World Trade Organisation (WTO). As the first African to occupy the sit, many had thought that it will mean faster trade development in Africa. But as the challenges above suggests, trade development in Africa requires more than having an African at the head of the institution. WTO does not vote but facilitates trade between nations. Under NOI leadership, the WTO has developed initiatives to support trade development in Africa. For Africa to shape the international trading environment in its favour, it would have to be united, and that is one way the AfCFTA can help.

Given that Mahama started the facilitation of the headquarters and secretariat of the AfCFTA in Ghana, it is expected that he will build on the initiatives in his first term on strong relationships within the ECOWAS region, peacekeeping in the region, and addressing challenges such as political instability, extremism, and economic integration within West Africa. He has previously emphasized the need for Africa to reduce its dependency on external factors and strengthen intra Africa trade and thus expected to place greater focus on the implementation AfCFTA.