The African Continental Free Trade Area (AfCFTA) agreement has created the largest free trade area in the world measured by the number of participating countries.

The agreement links 1.3 billion people across 54 countries with a joint gross domestic product (GDP) valued at US$3.4 trillion. According to the World Bank, it has the potential to lift 30 million people out of extreme poverty but achieving its full potential will depend on putting in place significant policy reforms and trade facilitation measures.

To achieve the economic transformation, it is necessary to stimulate private sector investment on the continent with an economy that is 80% informal and dominated by women and the entrepreneurial drive of African youth who continue to be a driving force of innovation in business.  

At the point of operationalizing AfCFTA in the year 2020, COVID-19 set in and caused major disruptions to trade across the continent and global supply chain systems including opportunities for women and youth.

By increasing regional trade, lowering trade costs and streamlining border procedures, full implementation of AfCFTA would help African countries increase their resiliency in the face of future economic shocks and help usher in the kinds of deep reforms that are necessary to enhance long-term growth.

AfCFTA, Women and Youth in Ghana
Women and youth led start-ups incubated at innovation hubs in Ghana are integral to the effective implementation of AfCFTA. This is explained by insights from grassroot focus group discussions and survey of start-ups and innovation hubs towards engagement on the framework agreement across the country.  

In Ghana, young entrepreneurs continue to set up and lead start-ups operating in the services, agri-business, design and digital innovations.

With targeted interventions, these potential trade opportunities can be well positioned to overcome low productivity, exploit scale economies, and use the continental market as a stepping stone for expanding into overseas markets, including through continental supply and global value chains.

Women participation in AfCFTA is outlined in the objective of the preamble to the Framework Agreement. With expected employment gains expected in agriculture and agro-food processing where women represent about half of the labour force, increasing market size presents more opportunities. 

AfCFTA Engagement with Start-ups and Innovation Hubs 

Start-ups and innovation hubs need to understand the operational standards, procedures and trade regulations associated with the AfCFTA. This will empower local SMEs to assess the trade and leverage on export opportunities afforded by the agreement and the wider market offers.   

Innovation hubs provide an avenue for entrepreneurs to incubate their new ideas, set up start-up businesses, develop relevant skills and technologies to scale. Some of the key strengths of innovation hubs lie in their adaptive and incorporative ability around concepts and skills in digital technologies, design thinking, and lean management harnessed for building the capacity of start-ups. These concepts will be particularly useful for start-ups as they are being encouraged to take advantage of the AfCFTA. 

Across the country, hubs and start-ups provide grassroot insights and serve as agents at the core of development due to their visibility and relevance at the community level helping to shape the narrative around the effective implementation of AfCFTA. Based on grassroot insights, new discoveries will inform public discourse and interventions to maximise the benefits of the agreement.  

The Prospects of AfCFTA

AfCFTA offers a lot more prospects for start-ups and innovation hubs in diverse ways. In a survey with hubs and start-ups on how the landmark agreement can be of benefit; partnership potentials, increased exports and income emerged as the top three opportunity areas.

Start-ups and Innovation hubs play key roles in providing solutions, jobs, skills development and business incubation services and so with AfCFTA providing an avenue for startup founders to develop new skills that enable trade in products and services across borders, and more importantly the fact that solutions from these businesses will have access to a bigger market to trade other than their countries of origin and eventually more income.

Innovation hubs on the other hand have the opportunity through AfCFTA to leverage technology for skills development in collaboration with partners across the continent and thus create a pool of entrepreneurs and solution providers capable of driving the agenda of integration in Africa through trade in products and services. 

Constraints to implementing AfCFTA

AfCFTA does not relieve businesses of the responsibility in pursuing strategic actions in areas such as financing, product development, marketing and branding to consciously take advantage of the inherent opportunities the agreement presents. 

In order to achieve the benefits of the AfCFTA, there is a need to address constraints which restrict trade across the continent. Among the key constraints, inadequate access to appropriate financing instruments (grants, equity and debt), infrastructure (payment systems, stable internet and affordable power) and relevant skills in trade facilitation, business development and technologies stood out. 

Therefore, there is a need to address the constraint at multiple levels across Ghana to foster regional integration and effective implementation of the trade agreement. 

Recommendations

In response to addressing the constraints and maximising the prospects of trade agreement for start-ups and small businesses, the following are recommended: 

AfCFTA City Desk - dedicated and localised support for start-ups and small businesses 

Digital Atlas - a repository of AfCFTA ready businesses, their products and services 

AfCFTA Accelerate - a step-by-step support for start-ups to scale their businesses 

Conclusion

In conclusion, we would like to reiterate the need to target women and youth led businesses with the prospects of AfCFTA and to build capacity to address constraints. 

By setting up AfCFTA City Desks at strategic points within the innovation hubs across the country in partnership with the Government of Ghana through appropriate ministries and agencies such as Ministry of Trade (MoTI) and the Ghana Standards Authority (GSA), AfCFTA secretariat, private sector and development partners can provide one stop information to start-ups with regards to standardisation, certification, relevant skills and information to take advantage of the trade agreement. Without this, start-ups and small businesses led by young people and women will lag and not experience the benefits of the continental agreement as envisaged. 

Additionally, a key component in making the AfCFTA work for start-ups and innovation hubs in Ghana is by developing robust payment platforms and access to a mix of financing (grant, debt and equity) to boost trade.  

Additionally, through the development of an AfCFTA digital atlas, information can be provided on who has and needs what to achieve seamless implementation.

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Written by Yaw Adu-Gyamfi and Paulina Adjei 

Yaw Adu-Gyamfi is a PhD Researcher, and Social Entrepreneur (E-mail: yagyamfi@gmail.com) while Paulina Adjei is Development Advisor  (pauline.adjei@gmail.com).