The deputy minister of Trade and Industry in Ghana, Mr. Joseph Annan, has disclosed that Nigeria is leading in Foreign Direct Investment (FDI) flow into Ghana with an estimated sum of $1 billion in the service sector, especially, in banking and insurance sectors in Ghana.
Speaking at a stakeholders’ forum on Breaking Trade Barriers in the West Africa Sub-region, organised by the Lagos Chamber of Commerce and Industry (LCCI), Annan said the trade between both countries is estimated to be over $620 million.
The minister said intra-Africa trade accounts for only 9 per cent of Africa’s international trade, lower than any other region in the world but noted that this aggregate figure understates the importance of intra-Africa trade.
According to him, 17 per cent of all Africa exports are to other African countries while fuel export was excluded. “Intra-African trade is more important to the average African country than to the continent as a whole,” he said.
Annan identified high transport cost and poor infrastructure as one of the constraints to West African trade, adding that transport costs were extremely high between both countries.
He gave example with the road freight tariffs in sub-Saharan Africa, which he said, were in the range of $0.04-0.14 per tonne and per kilometre compared to $0.01-0.04 per tonne and per kilometre in other developing regions.
The minister further said that trade to landlocked countries was costly with import costs three to five times the global average. “It takes 116 days to move a container from Bangui, Central Africa Republic, to the nearest port,” Annan said.
He said the overall poor state of infrastructure was exacerbated by the legacy of colonial trading patterns, which emphasised trade with Europe rather than with neighbouring territories.
He pointed out that the time consuming and costly border measures and un-harmonised and cumbersome regulatory systems are even greater barriers to trade than poor physical infrastructure.
The minister, however, noted that crossing a national boundary incurs a 4 per cent increase in trade cost, irrespective of the distance covered and said that from a recent survey of firms in African countries, revealed that 85 per cent experienced increased costs, over 50 per cent lost business and almost 25 per cent lost or damaged cargo; all due to border controls.
According to him, there was the need for efficient and harmonised customs procedures to reduce trade costs and intra-regional trade in the continent.
He said that improving Africa’s inter-state road network could expand trade by $250 billion over 15 years, at a cost of only $32 billion.