In the last few months, Nigeria and Ghana have engaged in diplomatic fisticuffs following the seizure and demolition of a building in the Nigerian Embassy, an action which led Ghana’s president, Nana Akufo-Addo to apologise to Nigeria, promising that his government will reconstruct the building. The diplomatic rhetoric has, however, continued to heat up; the most recent being a statement by the Ghanaian information minister, Kolo Nkrumah, rebutting 10 accusations put forward by his Nigerian counterpart, Lai Mohammed.
Mr Mohammed’s accusations included the seizure and demolition of a building in Nigeria’s Embassy compound in Accra, alleged unfair treatment of Nigerian traders, the alleged judicial bias in the harsh sentencing of convicted Nigerians, the deportation of Nigerian citizens from Ghana, and media-induced fear that he argues could to lead to xenophobic attacks on Nigerians in the country.
The Ghanian Minister of Information in a statement on 28 August refuted these claims citing Ghana’s commitment to addressing these differences while upholding the law. He further added that the failure of Nigeria’s foreign ministry to acquire all the proper documentation was part of what led to the demolition and seizure of the embassy property. Moreso, the deportation of 700 Nigerian citizens was because they were engaged in criminal activities.
On 17 December 2019, Nigeria’s Senate tasked its committees on Foreign Affairs and Trade & Investment to work with the foreign affairs ministry to investigate what it considered hostile policies against Nigerian traders in Ghana. The Senate was responding to a motion sponsored by Senator Ifeanyi Ubah (YPP, Anambra South), who complained about the closure of more than 600 shops owned by Nigerians in Ghana. What followed was an intervention by Presidents Akufo-Addo and Buhari through the Economic Community of West African States (ECOWAS). This intervention, however, seems to have been unsuccessful as recent reports have again shown that shops belonging to migrants in retail trading businesses are being shut down by the Ghanaian authorities.
A Look at Ghana’s Investment Promotion Centre (GPIC) Act
The Ghanaian authorities have dispelled claims that they are targeting only retail trading businesses owned by Nigerians. In a radio conversation, a spokesman for Ghana’s trade ministry, Prince Boakye Boateng, explained that West African migrant retail trading businesses, following Ghana’s Investment Promotion Centre (GPIC) Act, were supposed to pay taxes and other fees imposed on them. He further added that the law being enforced was under an agreement reached with the Ghana Union of Traders Association, which gave the union sole rights to trading in local markets.
The Ghanaian authorities have argued that under the GIPC Act, retail trading businesses were meant for indigenes. Foreign investment under the Act requires immigrants to have a minimum liquidity of $1 million USD. Even though the GIPC Act does not prohibit foreign investors from investing in any aspect of the economy, it makes clear exceptions for businesses that are reserved for Ghanaians. These businesses include petty trading, hawking, sale of goods or provision of services in a market (GIPC Act, 2013).
Despite claims and even videos circulating the Internet of a Nigerian trader displaying his business registration certificates and other documents, the inter-ministerial task force sent out by the government proceeded to lock up the shops of retail traders. Ghana’s government has claimed that Nigerian traders have failed to honour the ultimatum set to meet the requirements. On the other hand, the traders have claimed that the demand for equity of $1 million was exorbitant and unrealistic since they were only given 14 days to comply, making it reasonable to assume it was a stratagem by the Ghanian government to kick them out.
The regional context
Exactly a year ago, President Muhammadu Buhari of Nigeria closed the country’s borders to its neighbours. According to Nigeria’s government, the action was taken to stop the flow of illicit goods and illegal weapons into the country. That did not fly with Ghana, Nigeria’s top trading partner in West Africa, which imported about $4 billion worth of Nigerian goods in 2019. That is more than double the next country, Côte d’Ivoire ($1.2 billion). Even harder hit was Cameroon for whom Nigeria was its fifth-largest exporter after China, Thailand, France and Spain.
Ghana’s exports to Nigeria, source: tradingeconomics.com
The reactions across the sub-region to the closure were swift and angry. Despite entreaties and physical meetings with Buhari by Niger’s President Mahamadou Issoufou, Abuja refused to budge. Perhaps the worst hit was the Republic of Benin. A tiny country that has jocularly been referred to as Nigeria’s 37th state, its economy is sustained by its status as a middleman for imports such as cars, rice, chicken and every other item subject to Nigerian import bans or restrictions. The most high profile hardliner driving the border closure policy is the Comptroller General of Customs, Col. Hameed Ali, who recently said the African Continental Free Trade Area (AfCFTA) agreement would stifle domestic economic growth.
Nigeria’s exports to Ghana, source: tradingeconomics.com
Nigeria had signed the African Continental Free Trade Agreement in June 2019, just two months before the border closure went into effect. The AfCFTA was designed to make the continent the biggest free trade area in the world and when Nigeria finally decided to sign it after being one of its architects, it sent a signal that it was at least ready to do business with the rest of the continent, albeit very reluctantly. Just a few weeks later, the country practically closed its borders to the rest of the continent and its neighbours are biting back. Just last week, Cameroon banned the export of millet and maize to Nigeria ostensibly to “promote” food security, cutting off a lucrative economic activity for regions badly affected by the Boko Haram insurgency on both sides of the border.
A fragile union: what Ghana’s IPC Act could mean for ECOWAS and the AfCFTA
Following the success of “The Year of Return 2019” programme to mark 400 years since enslaved Africans arrived on the shores of the US, Ghana has positioned itself to be the prime destination for returnees and has made calls to have them invest in the continent. It is obvious that by setting a capital base of $1 million, Ghana is seeking ways to discourage petty trading by immigrants and at the same time give its citizens that market to occupy.
In speaking on the possible impact this action may have on the Ghanaian economy, Mr Andrews Gbande, Group Accountant for LMI Holdings, notes that it is unlikely that the GIPC Act will have much impact on foreign direct investment (FDI) since the country is aiming to attract “multinational companies whose influence or investment will have a bigger impact on the economy as far as consolidating gains from outside the Ghanaian economy is concerned”. It is not farfetched to claim that Ghana is more focused on attracting big investments as is evident by a demand for a capital base that exceeds what a vast majority would be able to afford.
There is no doubt that the implementation of the GIPC Act conflicts with the ECOWAS Protocol, which mandates all its members to stop the demand of visas, residence permits and allow citizens of member states to carry out commercial activities within their territories. Albeit, the Ghana Investment Promotion Centre law (Act 865) certainly puts restrictions on the ECOWAS protocol, setting conditions for investments and economic activities by West African migrant groups.
With Ghana as the secretariat of theAfCFTA, the largest free-trade area by participation after the World Trade Organisation and tasked with the duty of creating a single market, deepening the economic integration of the continent, aiding the movement of capital and people and facilitating investment, the enforcement of the GIPC Act, appears to be counterintuitive and is likely to create more unease in doing business in Ghana for future investors.
As an active member of the ECOWAS and a key stakeholder of the AfCFTA, Ghana is obliged to respect free trade protocol which it assented to in these agreements. Ghana’s implementation of the GIPC Act, one that seems to be targeting Nigerian traders, does not send the right message to AfCFTA and ECOWAS members. Besides, it sets the wrong precedence for overzealous leaders or citizens to become hostile towards African migrants engaged in businesses, a phenomenon that has led to xenophobic violence in South Africa.
Nigeria is also not absolved from this as it has a poignant history with Ghana, one laced with subtle but less than zealous xenophobia. The famous 1983 Ghana Must Go migration comes to mind. More recently, Nigeria’s border closure has had serious economic implications for Ghanaian exporters. This was made clear through a series of tweets by Ghana’s Foreign Minister, who noted that some of the country’s exporters have had their goods stuck in the Seme Border for months. She also pointed out Nigeria’s failure to duly inform members of the ECOWAS before carrying out this decision. The August 2019 border closure in Nigeria led to a serious decline in economic activities in the ECOWAS region. The UN COMTRADE data shows that 2019 witnessed a US$191.65 Million decline in Nigeria exports to Ghana. Nigeria’s decision to stop nearly all imports into the country by banning items such as rice amongst others has created a beggar-thy-neighbour effect that other countries have been reeling from the last one year. One simply does not insulate itself to trade despite being responsible for at least 70% of the region’s GDP earnings and expect other countries not to take action. Ghana’s action with the GIPC thing specifically targets Nigerian markets, and it runs counter to the principle of free trade that ECOWAS was created for. Patriotism by Nigeria or Ghana is not going to feed people. Economics and free trade will.