It looks like Ghana is highly uncertain about what it wants from Nigerian businessmen: outright ban on foreign retailing or simply taxes? After series of agitations against the presence of Nigerian retailers in the country last year, the West African country of Ghana is back again with a new demand, in the middle of the coronavirus pandemic. According to the Ghanaian Ministry of Trades, Nigerian traders must pay the required taxes and other fees imposed on them by the authorities. The ministry has equally rejected claims of unfair treatment to Nigerian traders in the country during the enforcement of the Ghana Investment Promotion Council regulations.
“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,’’ the President of Nigerian Traders Union in Ghana, Chukwuemeka Nnaji, was quoted as saying by News Agency of Nigeria.
“As of Thursday, they had moved to another area and started locking up shops of Nigerian traders. Nigerian life in Ghana matters. This is livelihood of Nigerians being destroyed by Ghanaian authorities. This is not being perpetrated by a trade union, but Ghanaian authorities,” he added.
“They also demanded that we must employ a minimum of 25 skilled Ghanaian workers and must not trade in commodities that Ghanaian traders have applied to trade in.The humiliation of Nigerians is getting out of hand. We are calling on the Nigerian government to come to our aid. We have legally registered our businesses and we pay taxes,” he said.
Here Is What You Need To Know
- The latest development is happening despite the intervention of the presidents of Ghana and Nigeria through the Economic Community of West African States.
- In one video on social media, a Nigerian trader whose shop was forcefully locked up by the Ghanaian security officials was asked to pay the $1 million registration fee.
- The victim had shown the officials his business registration certificate and other documents but the enforcement team was adamant as they insisted on shutting his premises.
- Covered by local radio station, Starrfm, the Head of Communications, Ministry of Trade, Prince Boakye Boateng, said Nigerian traders had failed to honour an ultimatum to meet the requirements.
“It cannot be we’ve been insensitive; if that is what they’re saying, I’ll be disappointed because I’ll rather say they have rather been unfair to us as a regulatory body because we have given them more time than enough to the extent even the Ghanaians thought that the ministry was not even on their side or the ministry wasn’t ready to even enforce the law,” he was quoted as saying.
- He recalled that the shops were locked last December and later re-opened following the intervention of President Nana Akufo-Ado.
- According to him, the traders complied but have not regularised their documents for verification.
Ban On Foreign Retail Trading Or Simply Taxes?
Last year November, Ghana Union Traders Association (GUTA) demanded the total closure of all retail shops belonging to foreigners, with claims that the government had not fulfilled its promise of ridding the market of such traders despite several appeals. GUTA dared foreign traders whose retail shops had been closed to sue them if they felt they were being treated unfairly.
According to them, the activities of the foreigners breach Section 27(1) of the Ghana Investment Promotion Centre’s Act (Act 865).
Citing the closure of the Nigerian border to protect its country from the smuggling of goods into their country, the Association, then, said they would not tolerate the foreigners anymore, and demanded that their shops be closed down.
The latest move is the first ever public backing of the raids on foreign-owned businesses by government since the agitations started.
A Look At The Controversial Section 27(1) of Ghana’s Investment Promotion Act
According to Section 27 (1) of the GIPC Act, a person who is not a citizen or an enterprise which is not wholly-owned by a citizen shall not invest or participate in the sale of goods or provision of services in a market, petty trading or hawking or selling of goods in a stall at any place. The list of prohibited trading activities are:
- The sale of goods or provision of services in a market, petty trading or hawking or selling of goods in a stall at any place;
- The operation of taxi or car hire service in an enterprise that has a fleet of less than twenty-five vehicles;
- The operation of a beauty salon or a barbershop;
- The printing of recharge scratch cards for the use of subscribers of telecommunication services;
- The production of exercise books and other basic stationery; f. the retail of finished pharmaceutical products;
- The production, supply, and retail of sachet water;
- All aspects of pool betting business and lotteries, except football pool.
Consequently, enterprises eligible for foreign participation and minimum foreign capital requirement are as follows:
A person who is not a citizen may participate in an enterprise other than an enterprise specified in section 27 if that person
- In the case of a joint enterprise with a partner who is a citizen, invests a foreign capital of not less than two hundred thousand United States dollars in cash or capital goods relevant to the investment or a combination of both by way of equity participation and
- The partner who is a citizen does not have less than ten percent equity participation in the joint enterprise; or
- Where the enterprise is wholly owned by that person, invests a foreign capital of not less than five hundred thousand United States dollars in cash or capital goods relevant to the investment or a combination of both by way of equity capital in the enterprise.
- A person who is not a citizen may engage in a trading enterprise if that person invests in the enterprise, not less than one million United States dollars in cash or goods and services relevant to the investments.
- For the purpose of this section, “trading” includes the purchasing and selling of imported goods and services.
- An enterprise referred to shall employ at least twenty skilled Ghanaians.
How Did The Taxes Come In?
By Ghanaian law (the GIPC Act), all enterprises in Ghana with foreign participation are required to register with the Ghana Investment Promotion Centre (GIPC). Under the new GIPC Act, 2013 (Act 865), the minimum capital required for retail business has moved from US$300,000 to $1 million, while foreign investors who participate in joint venture enterprises have to show a minimum capital of $200,000 with wholly owned foreign enterprises showing a minimum capital of $500,000.
It seems clear enough that the GIPC Act states that a foreigner may engage in a trading enterprise in Ghana if that person invests in the enterprise, not less than one million United States dollars in cash or goods and services relevant to the investments. This, in no way, means direct taxes to the GIPC unless it is clearly stated under the GIPC Act. The Act does not, also, specifically mention Nigerians as being the only foreigners targeted.
These moves by the Ghanaian government may not been unconnected with the border closure tussle with its neighbouring Nigeria, which had, prior to the outbreak of the coronavirus, shut its land borders with Ghana.
Greater Accra Regional Secretary of GUTA, David Kwadwo Amoateng had on an Adom FM’s morning show, last year, said the Nigerian government had not been fair to foreign traders by closing the land borders.
In return, he expected the Ghana government to prevent Nigerian traders from bringing goods into Ghana, but that plea, he said, had fallen on deaf ears.
“Either somebody’s bread has been buttered or we are cowards. Government is not being fair to us,” he fumed.
“Let’s boycott Nigerian products as payback to their government’s action. How can we be slaves in our own country?” he added.
Mr Amoateng cited how Dangote cement, owned by Nigeria’s and Africa’s richest man, Aliko Dangote, had taken over the market while local ones, from GHACEM to others, are suffering.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer