What Consequence Will Ghana's GIPC Law Have On Her ECOWAS Trading Patner?

The new law by the Ghanaian authorities which demands that all foreigners must have an initial capital of $300,000 and employ at least 10 Ghanaians before they can start any business in Ghana regardless of the size of the business is taking a consequential toll on her ECOWAS partners, especially Nigeria business owners in Ghana.

Since the beginning of the exercise on Tuesday, foreign retail traders in Ghana especially Nigerians, her closest neighbor, have lamented on the law which they considered “harsh” on them since the reality of the matter is that foreign traders in the country are also drivers of the nation’s economy.

The law, Section 19(3) of the Ghana Investment Promotion Centre (GIPC) Act 478, 1994, states that "In the case of trading enterprise involving only the purchasing and selling of goods, which is either wholly or partly owned by a non-Ghanaian, there shall be an investment of foreign capital, or its equivalence in goods worth at least $300,000.00 by way of equity capital, and the enterprise shall employ at least 10 Ghanaians."

It was gathered that the law has been in the statutory code for years but has not been implemented until now.

PANA reports that the Ghana Union of Traders Association (GUTA) has been demanding action against the foreigners, saying they had been muscling out Ghanaians from the retail business.

 Ghana’s Daily Guide reported that most of the shops owned by foreigners at the Central Business District were locked by their owners who knew about the intention of the National Task Force to hit the markets while making sure that the implementation of the Ghana Investment Promotions (GIPC) Law is enforced.

Members of the task force locked the shops with their special padlocks in the absence of the shop owners and it is said, will remain so until they can prove that they have meet the standards laid down.

 “Foreigners operating in Ghana’s open markets were expected to stop their activities by June 20, 2012 or incur the wrath of the Ministry of Trade, which intends to apply the law after several protests by Ghanaian retailers. The three-month ultimatum for non-Ghanaians to vacate the market places ended a fortnight ago.” In all there are about 1070 shops operated by non-Ghanaians across the country.

A representative of the Ghana Union of Traders Association (GUTA) on the Task Force, Daniel Tenkorang, asserted that shops owned by foreigners have been mapped out for inspection. He stated that “the exercise would continue for the next two months to ensure that there are no foreigners in our markets who fight over space and businesses with indigenes.”

The Inter Agency Task Force is made up of officials from the Registrar-General’s Department, Ghana Investment Promotion Centre, the Ghana Revenue Authority, Police, Immigration Service, the Ministries of Trade and Industry, and Foreign Affairs.

However, Nigeria’s Vanguard reported that a Nigerian businessman trading in Ghana, Ndukaku Mbanefo, said, “They closed our shops because they said we did not comply with the government policy that requires every foreigner who wants to start business in Ghana to have an initial capital of $300, 000 and must employ 10 Ghanaians to work with him regardless of the size of the business. Even if it is just a small restaurant or a barber shop you must employ 10 Ghanaians and show evidence that you have $300,000 before you can start.”

Mbanefo described the situation by saying "some Nigerian traders had to run away and locked up their shops when they saw the Ghanaian law enforcement agents coming but when the law enforcement agents got to the shops, they would relock the shops with their security padlocks. Their plan was to give out these shops abandoned by Nigerian businessmen to the Ghanaians."

Although, Ghana’s senior officials have declined that Nigerian were the main target of the exercise, many Nigerians have refused to subscribe to such opinion by stating categorically that they were primarily targeted in this exercise as preference were shown to other African foreign counterparts from Mali, Cote D'Ivoire, Niger, Cameroon.

The recent move by the Ghanaian authority to debar foreign retail traders who do not meet stipulated requirement is not the first attempt by their authorities to undermine businessmen. A report from vanguard indicated that the Ghanaian authorities have been embarking on hostile business practices against Nigerians who are predominantly in real estate, textile and garments, electronics, banking and telecommunication and tourism. It had also imposed high tariff on Nigerian movies and restricted Nigerian actors from shooting films in Ghana.

In an interview with vanguard, Nigerian House of Representatives, Mrs. Abike Dabiri-Erewa, was quoted by Ghana’s chronicles: "The Ghanaian Parliament has a law which says that before you can do petty business in Ghana, you must deposit $300,000. Most of these Nigerian traders in Ghana deal in small things such as CDs, videos, cassettes etc. So, for you to say bring $300,000 before you can set up a petty business, is a bit hypocritical. This has been discussed at the Presidential level."

"I remember when the Ghanaian President came here, we discussed it, and he said: 'no, it is not targeted at you and don't worry about it.' The Ghanaian Minister of Trade was even in Nigeria and assured that it was not targeted at Nigerians, that Nigerians are okay, but throughout last week, Nigerian traders have been given the directive to leave within the week."

"They based this on a Foreign Investment Act of 1994, which specifically directed that foreigners, including Nigerians, must register with a minimum requirement of not less than $300,000, and this is about N46 million, and even if the traders come together, I don't think they will get N46 million to do business there. Ghana should not take us back to 28 years ago, when we had issues in West Africa," the paper quoted the Senator as saying.

Popular belief also asserts that the move by the Ghanaian government is a breach on the Economic Community for West African State (ECOWAS) treaty on free trade among its member nation which could cause bad blood between ECOWAS nations.

However, Ghana’s Minister for Foreign Affairs, Alhaji Mohammed Mumuni, said the threat to break diplomatic relations with Ghana had not officially come to his attention and that Ghana had not breached any ECOWAS protocol or treaty.

He said that Nigerians should exercise restraint, since the law was not targeted at them.

According to Mumuni, the aforementioned law does not allow foreigners to engage in retail trade business in our markets, including selling in kiosks. He noted that no foreigner even has the right to buy a car and be driving it as a taxi in Ghana.

The Foreign Minister further told The Chronicle that any foreigner, who wants to engage in the retail business in Ghana, should invest not less than $300,000 in the retail trade that he or she wants to engage in. He noted that retail businesses such as the Accra Mall and Koala among others, though do not belong to Ghanaians, have met the minimum investment threshold, hence the decision to allow them to operate.

The ECOWAS parliament has since intervened calling for the suspension of the exercise. However, the exercise began on Tuesday despite the plea from the delegation from ECOWAS to suspend the exercise.

According to the country’s Minister of Trade, Hannah Tetteh, the request of the ECOWAS Parliament to suspend the exercise could not be granted as the move to rid Ghana’s markets of foreigners in the retail industry did not violate the ECOWAS Protocol.

Meanwhile, the Deputy Speaker at the ECOWAS Parliament, Michael Teye Nyaunu warned the ministry to be mindful of the implication of its actions.

He said inasmuch as the regional legislative body could not dictate to the Ministry of Trade and Industry, more sensitisation and education should be carried out on the exercise so as to prevent a looming trade war between Ghana and her ECOWAS neighbours.

 The vice president of a policy think-tank, IMANI Ghana, Mr. Kofi Bentil, has also cautioned against “protectionism”. He said “If the law allowing Ghana to take the action was bad, the implementation was even worse, fearing other countries might retaliate and Ghanaians living in those countries will be the losers.”

 In 1969, the government of Ghana implemented the Alien Compliance Order, which led to many Nigerians leaving Ghana. The Nigerian government, under ex-President Shehu Shagari, retaliated in 1983, when over one million Ghanaian economic refugees were deported from Nigeria.

The decision dislocated the Ghanaian economy, which was already in shambles, especially at the time the country was faced with a severe drought. Years down the line, Ghana seems to have recovered from her economic woes, with her per capita income now hovering around $1,300. This is attracting Nigerians to troop to Ghana to seek economic freedom, but the decision to go into the retail trade, reserved for only Ghanaians, appears to have angered petty traders in the country, who have put severe pressure on the government to implement the GIPC law barring foreigners from the sector, chronicles observed.

 Ventures Africa