Impact of African Continental Free Trade Area (AfCFTA) on Ghana: A Computable General Equilibrium Approach

This study assesses the economic impact of the African Continental Free Trade Area (AfCFTA) on Ghana using a Computable General Equilibrium (CGE) framework based on the GTAP 10 database. Ad valorem equivalents (AVEs) of non-tariff measures (NTMs) were estimated for Ghanaian sectors using the ISIC classification. Policy simulations involved eliminating import tariffs and export taxes on 90% of tariff lines and reducing NTMs by 50% across AfCFTA members. NTMs were implemented through iceberg costs (import-augmenting technological change, AMS) and exporter costs (AXS), using the RunGTAP software with the GRAG solution method. Results show that tariff and NTM reductions generate significant gains for Ghana and other AfCFTA countries. Ghana experienced improvements in GDP, real exports and imports, terms of trade, welfare, and employment. Welfare gains justify Ghana's AfCFTA participation, although a trade deficit of US$4,766.69 million emerged due to increased import affordability. Reductions in NTMs-especially those affecting exporters-produced the largest regional benefits by lowering intermediate input costs and enhancing intra-African trade. The findings highlight the importance of regulatory reforms, export diversification, and trade facilitation to maximise AfCFTA's development impact.