The recent closure of shops belonging to Nigerian traders in Ghana highlights major hurdles to cross ahead of the borderless African Continental Free Trade Area (AfCFTA) billed to start in January 2021.
The Ghanaian Ministry of Trades recently demanded $1 million from each Nigerian trader for the Ghana Investment Promotion Council (GIPC) registration fee, locking up shops belonging to Nigerians who were unable to pay.
This amount demanded by Ghanaian authorities equals N470 million or GH₵5.78 million, which is large enough to set up 500 small businesses in Nigeria and Ghana.
Apart from the constant use of “foreigners” in Ghana when referring to Nigerian and West African traders, frequent harassment of Nigerian businesspeople by Ghana Union of Traders Association and ban on participation in retail business are pointers to obnoxious policies that could hurt the AfCFTA from January 2021.
“Trade integration is meant to give us more business access with one another, but it appears that we are not building that synergy,” Chijioke Ekechukwu, former director-general of Abuja Chamber of Commerce and Industry, told BusinessDay.
Ekechukwu said in the light of the AfCFTA, such row in trade relations could be detrimental to both countries.
The requirement for GIPC registration in Ghana is $1 million minimum foreign equity, while registration fee is 31,500 cedis, BusinessDay understands. But there is no clarity on these provisions as Ghanaian authorities constantly refer to this as tax which Nigerian traders must pay.
Ghanaian laws prohibit traders outside the country’s shores, who are referred as foreigners, from participating in retail trade.
“The row between Nigeria and Ghana is not good for our regional economic integration that we have through ECOWAS,” Monday Osasah, acting executive director, African Centre for Leadership, Strategy and Development, told BusinessDay.
Ghana President Nana Akufo-Addo said in December 2019 after an earlier lock-up of Nigerian shops in the country that the Ghana Union of Traders Association made no mistake in the interpretation of the law banning foreigners in the local retail market, according to BBC.
“We cannot make headway with AfCFTA when Ghana does not allow West African neighbours to trade in its country. I see it as a retaliation against Nigeria’s border closure,” Ike Ibeabuchi, managing director of MD Services, a manufacturing, trade and servicing outfit, said.
The closure of Nigeria-Benin border has hurt Ghanaian traders who trade along the corridor badly. As of the third quarter of 2019, Ghana was the biggest importer of Nigerian products. It imported 17.18 percent of made-in-Nigeria products within the period, beating the European Union and China, according to the National Bureau of Statistics(NBS) data.
In January 2020, Ghana President, Akufo-Addo pleaded with President Muhammadu Buhari to reopen the closed borders because of its major negative impact on Ghana’s economy. But this has not happened.
However, Ayoola Olukanni, director-general of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), said such challenges would have no impact on the AfCFTA.
He said the fact that the regional or continental trade is laced with critical problems does not mean that the AfCFTA would fail, disclosing that many Nigerian firms are already taking a long view on the trade treaty.
“I am not saying there are no major problems, but the AfCFTA is a strategic option for businesses, and these problems do not invalidate the visions of the AfCFTA,” Olukanni, an ambassador, said.
The AfCFTA seeks to liberalise trade among African countries. It is targeted at a ‘borderless’ Africa, with an eye on a single market for goods and services on the continent.
It is easily the largest trade agreement since the World Trade Organisation (WTO) in 1994 and a flagship project of Africa’s Agenda 2063, targeted at creating a single market for 1.2 billion people and exposing each country to a $3.4 trillion market opportunity on the continent.
Trade among West African countries is about 12 percent, which is relatively low when compared with other regions. On continental basis, trade among African countries is 16 percent, which is poor when compared with Europe’s 59 percent, Asia’s 51 percent, North America’s 37 percent, and Latin America’s 20 percent, data show.
There are concerns that the inclinations of several African nations could hurt the AfCFTA trade agreement that promises to make Africa a trading hub.
Recently, South African mobs chased away business owners, claiming that they were foreigners taking over their businesses and jobs. The Nigerian government has shut its border with neigbouring Benin Republic for one year.
In March 2019, Rwanda shut down borders against Uganda over diplomatic row that has seen the two countries suspecting each other.
In April 2019, Eritrea unilaterally closed all border crossings with neighbouring Ethiopia less than a year after the two countries made peace
In June 2019, Kenya shut its borders with Somalia for security reasons one week after outlawing along the coast near the Somalia border. Kenya authorities cited increased illegal trade, as well as human and drug trafficking in the area as major reasons for the latter action.
In August, Equatorial Guinea said it was building a Trump-like border wall to stop Cameroonians and West Africans from illegally entering its territory.
“There is already a dent in the way some African countries are going about this development. It is like we’re fighting each other more rather than concentrating on trading among ourselves despite our huge and burgeoning population,” Osasah, earlier quoted, further said.