Potential impacts of the African Continental Free Trade Area on agri-food sectors and food security in Ghana

This study employs the economy-wide model DEMETRA to provide a detailed characterisation of the impacts of the African Continental Free Trade Area on the Ghanaian economy from 2020 to 2035 and how these economy-wide impacts will affect food consumption and affordability. It considers two liberalisation scenarios – tariff-only liberalisation and tariff and non-tariff measures liberalisation – across four potential liberalisation schedules defined by different government revenue, food security and economic development objectives. Results from a continental-level assessment are linked to the DEMETRA model to accommodate changes in international markets as a result of the establishment of the African Continental Free Trade Area. The study shows that tariff-only liberalisation leads to positive effects on trade and that there is a further boost to trade when tariffs are combined with non-tariff measures. A moderate growth in gross domestic product potentially increases capital stock and intermediate goods for manufacturing. Demand for labour in the manufacturing sector also rises, but labour demand in livestock production declines. In terms of food security, prices of processed food generally decline, while prices of cash crops rise. Overall, household consumption of food and other commodities rises. Ultimately, overall government tax revenue falls as a result of a significant reduction in trade taxes, which calls for innovative ways to expand tax collection in country.