Potential trade, welfare and revenue implications of the African continental free trade area (AFCFTA) for Ghana: an application of partial equilibrium model

Abstract

This study estimates the potential implications of the implementation of African Continental Free Trade Area (AFCFTA) Agreement for Ghana in terms of trade, welfare and revenue effects. By applying the WITS-SMART simulation model on 2018 disaggregated international trade data, the paper finds that total trade effects in Ghana are likely to surge by US$ 148.3 million while promoting consumers' welfare by US$ 8.597 million. However, revenue losses are imminent as the country might experience a drop in tariff revenue of US$ 8.604 million. Overall, the free trade area is expected to improve on the country's trade balance as exports are envisaged to outweigh imports. In order to mitigate the revenue losses, the paper recommends that the country keep substantial portion of tariff lines for sensitive and excluded products over a longer period during the liberalization