Inside Africa: Regional Trade War Could Signify Issues With Trade Agreements
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Tensions between Nigeria and Ghana are growing, potentially exasperated by the global COVID-19 pandemic. As businesses struggle to stay afloat during lockdowns and travel restriction to keep the coronavirus in check, Nigerians are accusing local authorities in Ghana of discrimination in Accra, the capital of Ghana. Nigerian traders are getting shut down by these authorities because of specific investment requirements for foreign businesses owners in Ghana, which many Nigerians claim are targeting them specifically. Nigerian-owned trade businesses in Ghana are finding themselves shut down by the local government, jeopardizing livelihoods and leaving many to wonder why they seem to be bearing the brunt of these policies all foreign business owners are supposed to comply with and what this will mean for regional relations.
Geoffrey Onyeama, the Foreign Affairs Minister of Nigeria, calls out Ghana’s actions against Nigerian traders operating businesses in the country, saying that the Nigerian government “has watched with dismay” the way its citizens have been treated in Ghana and declared swift action would be taken to address the situation. Nigeria and Ghana are both members of the Economic Community of West African States (ECOWAS), and cooperation in trade policies should be complementary at the very least, though the current situation has called for open dialogue and conversations to be had between the two countries.
In an early September Ghana Broadcasting Corporation segment, representatives from both governments came together to begin these conversations. Ghana’s Speaker of Parliament Mike Oquaye said that “there have been misunderstandings” relating to how Nigerian traders have been treated, and a “closer dialogue” would be beneficial. On the other end of the table, Nigeria’s Speaker of the House of Representatives Femi Gbajabiamila brought up the “very robust” conversations with Oquaye, agreeing that it is time for the two countries to show more unity for the sake of the region. Both are proposing to establish a trade council in order to support this mission and, as Gbajabiamila states, do whatever is necessary “on both sides” to ensure long-term cooperation. This “whatever it takes” attitude could be what is needed for the two largest economies of West Africa to finally resolve this trade war to allow for foreign trade and regional stability to prosper.
As major powers in the region, Ghana’s and Nigeria’s year-long trade war undermines ECOWAS’ efforts to unify its 15 member states and promote free trade, which could mean less reliance on outside markets and greater economic opportunities for all involved. Getting Ghana and Nigeria to cooperate would be beneficial not only for the two countries in terms of foreign trade, it could help promote better regional cooperation overall as the region’s two largest economies - Nigeria being the largest and Ghana being the second - set themselves up as examples of what successful cooperation could look like. Nigeria is actually a heavy hitter in Ghana’s economy as its third most important trade partner in 2010, making up approximately 10% of Ghana’s foreign trade. Nigeria also serves as an important source of capital given the size of its own liquidity. Many Nigerians have set up their own small-scale businesses in Ghana and make up a large portion of the non-citizen population there. Despite the potential for strong economic ties between the two countries, over the more recent years, relations have taken a turn for the worse as Ghana and Nigeria battle over economic policies. The large number of Nigerians in Ghana means that when the Ghanaian government started cracking down on foreign-owned businesses, Nigerian’s felt particularly targeted.
Ghana has implemented strict policies which direct foreign-owned businesses to investment amounts that some criticize as excessive. The Ghana Investment Promotion Centre Act (GIPC) was established in order to facilitate more investment into the country to spur its economy further. It dictates the levels at which foreign enterprises must invest, ranging from a couple hundred thousand in US dollars to $1 million. If the non-Ghanaian-citizen works in partnership with a citizen, the investment only needs to be $200,000. Without a Ghanaian partner, the business owner is to pay up $1 million. GIPC also directs these foreign-owned enterprises to hire a certain number of Ghanians and the types of enterprises they are not allowed to participate in. The Ghana Union of Traders Association has made a more recent push to enforce GIPC and shut down businesses not in compliance with the act, shutting down several hundred Nigerian-owned trade enterprises in the process. While the Ghanaians are looking for effective ways to promote investment into their economy, Nigerians feel attacked in the actual implementation of these policies which could be working to seriously undermine ECOWAS and the African Continental Free Trade Agreement (ACFTA).
ECOWAS works specifically within West Africa with its 15 member states, including Ghana and Nigeria, to promote economic partnership. This most recent in-fighting shows the importance of complementary trade policies which actually work to support free trade and movement in the region. By supporting free movement of migrant workers, cities like Accra could find themselves important hubs within the region, bringing the political and economic capital needed to promote stability. GIPC brings to question Ghana’s commitment to ECOWAS’ mission which depends on full cooperation of its member states. The same goes with the highly anticipated implementation of ACFTA which broadens ECOWAS’ and similar regional agreements’ mission to include all of the continent, though Nigeria has yet to ratify it. ACFTA looks to bring economic stability to Africa by easing trade restrictions, promoting free trade and encouraging further investment into local economies. The agreement requires the full participation of as much of the region as possible if it is to move Africa’s economy up in the global community. While many are hopeful that the agreement could be a positive step for the region, Ghana and Nigeria could represent some of the struggles it could face during full-fledged implementation.
