Stranded foreign traders in Ghana

By Victoria Ojeme

Since 2013, Ghana’s Investment Promotion Center (GIPC) Act has governed investment in all sectors of the economy and outlines the government’s investment framework, but the implementation of the legislation, some experts said it could end up increasing the burden on domestic and international investors.

Specifically, the GIPC requires foreign investors to satisfy a minimum capital requirement. The minimum capital required for foreign investors is USD 200,000 if they do a joint venture with local partners or USD 500,000 for enterprises that are wholly owned by foreign investors.

Trading companies either entirely or partly-owned by foreigners require a minimum capital contribution of USD 1,000,000 and are required to employ at least 20 skilled locals. Capital contributions may be satisfied by remitting convertible foreign currency to a bank in Ghana or by importing goods valued in this amount. This minimum capital requirement does not apply to portfolio investments, enterprises set up for export trading or their branch offices.

Apparently, this law was made at the instance of indigenous traders who complained that Nigerians were unfairly dominating small-scale trading in Ghana.

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A taste of what is to come was seen during August 2019 closure of land borders by the Nigerian government over smuggling and security challenges. Ghanaian traders and manufacturers complained bitterly that hundreds of truckloads of goods meant for the Nigerian market were seized in Nigeria due to the closure and retaliated by shutting Nigerian businesses.

The main issue here is the conflict between the protection of national interests and the welfare of citizens which clashes with the ideals of sub-regional cooperation for the economic and social benefits of all within the region.

Last week, shops belonging to Nigerian traders across Ghana were serially locked up by Ghanaian authorities who demanded cash payment of $1 million from them before the shops would be opened.

But speaking on the incident on a Ghanaian radio station, StarFm, the Head of Communications, Ministry of Trade, Prince Boakye Boateng, said the Nigerian traders had failed to honour an ultimatum to meet the requirements.

This is coming at a time that GIPC said foreign investors operating in Ghana, have recorded an average revenue loss of $75,000 in the second quarter of 2020.

The Chief Executive Officer of the Ghana Investment Promotion Centre (GIPC), Mr. Yofi Grant said the losses were as a result of the coronavirus pandemic and its associated lockdowns, closure of land and air borders that have since affected demand and supply chains globally.

Meanwhile, the acting Vice President of the Ghana Union of Traders Association, Clement Boateng, has said that there is no basis for giving preferential treatment to Nigerian traders in Ghana.

He said “I don’t see any controversy surrounding this law which was passed by our (Ghanaian) parliament in 1994. It used to be $200,000, then the law was reviewed and it came to one million dollars, which you have to provide in cash or in equity if you want to enter the retail business. What is happening is, over the years, those who are supposed to enforce the law, that is, the GIPC, have relaxed and they have allowed foreigners to flout the law with impunity.”

“The Ghana Union of Traders Association has, over the years, complained to the authorities to try as much as possible to enforce the law, so that they can sanitise the retail industry. It is not that we are driving foreigners away.”

READ ALSO: Again, Ghana hits out at Nigerians

The President of Nigerian Traders Union in Ghana, Chukwuemeka Levi Nnaji said that over 160 Nigerian shops remained closed at Circle area near Accra, Ghana alone despite government negotiations.

According to Nnaji, an inter-ministerial task force went round on August 10 to identify shops owned by Nigerian traders and request for registration of business taxes, resident permit, standard control and GIPC registration.

“Most of our members do not have the GIPC registration, because it requires one million dollars cash or equity and they gave us 14 days within which to regularize,” he said.

According to Nnaji, an inter-ministerial task force went round on August 10 to identify shops owned by Nigerian traders and request for registration of business taxes, resident permit, standard control and Ghana Investment Promotion Council (GIPC) registration.

“Most of our members do not have the GIPC registration, because it requires one million dollars cash or equity and they gave us 14 days within which to regularise.

“They are citing the closure of Nigerian borders and many other things as the reason for the enforcement. I also think it’s because of the election that is fast approaching. The government wants to use it as a campaign promise being fulfilled.”

“At this point, it is only the Nigeria government that can resolve this issue with their Ghanaian counterpart because the enforcement has a lot to do with the Nigeria-Ghana trade relations.”

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“As we speak now the Ghanaian Authorities are still closing the shops of Nigerian traders in Kumasi Ashanti Region of Ghana,” he said.

He added that they have run out of options, and called on the Nigerian government to help them to resolve the impasse.

With all these at stake, it is perhaps time that ECOWAS sat down to define where the free movement of goods and persons stops and the need to protect the individual interests of member-states starts.

Vanguard News Nigeria