Weekly Insights – Ghana – 10/02/2017 – Nimed Capital Limited

September 20, 2020 By: Nimed Capital0 comments

THOUGHT OF THE WEEK

Overview of the New Continental Free Trade Area Agreement

At the 28th Ordinary Session of the African Union (AU) Assembly in 30th January 2017, the Heads of States and Governments, within the continent, agreed to a Continental Free Trade Area agreement (CFTA). CFTA would enable all African States to trade among themselves freely, which if successfully executed, would lead to a significant reduction in the cost of doing business in Africa. The agreement is expected to deepen regional integration, boost intra-Africa trade and facilitate overall economic growth.

Our Expectations about the CFTA Deal

Free Trade Zone to Positively Impact Economic Growth Continentally: The CFTA deal will attract multi-national companies into the continent whiles consequently allowing native companies to sell in other foreign markets. Companies within the free trade zone would benefit from a bigger market size that will provide opportunities to develop and explore new products and services, as the marginal cost of doing business reduces amid increased sales and decreased operational overheads.

Increased Investment Inflows: Elimination of trade barriers and increased cross country mobility will help attract capital into the continent, specifically, Foreign Direct Investments (FDI’s). This will benefit member countries in the form of increased economic growth emanating from an upward productivity cycle. An inflow of foreign capital will further stabilize our banking system, by providing much needed forex for operations.

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