An analysis on investments in Ghana finds that an old law is restricting foreign investments to that country as it prescribes unreasonable minimum investment limit while leaving out domestic ones from the legal periphery. The business entities mainly run by the Nigerian traders claim that their businesses are being targeted on the basis of an obsolete decree that stipulates minimum investment of $30,000.
According to GhanaWeb, Ghana’s investment rules can protect some indigenous businesses against some foreign companies in the short term, and to the detriment of consumers, but this is dwarfed by the economic loss it will cause in the medium to long term. It said the protected local industries and businesses produced inferior goods and were unable to compete on price as they had little incentive to increase productivity, and gave few options to the consumers.
It also suggests that business and trade restrictions make Ghanaian consumers suffer higher prices and undermine sustainable, widespread economic growth. It further indicates that Ghana must evaluate the implications of investment limit since Ghana itself is a member of the Economic Community of West African States (ECOWAS).
On the contrary, earlier this month, Hanna S. Tetteh, Ghana Minister of Trade and Industry had said that “Now as far as businesses between Ghana and Nigeria are concerned, again from our point of view, we do not have a problem. The issue has been a misrepresentation of the legal position as it stands with regards to business.” She further added that some regulations were in place to protect jobs and petty businesses of the locals.
Despite the obstacles, trade between Nigeria and Ghana in recent years has quadrupled to $525mn in 2008 – but mainly consists of oil. Nigeria earned $89mn in non-oil exports to Ghana (out of $500mn overall exports), while Ghana’s exports to Nigeria reached $25mn. Nonetheless, Nigerians have investments of nearly $6bn in Ghana, boosting jobs, creating wealth and bolstering taxable revenue. According to the Africa Economic Outlook report 2010, only 10 percent of the continent’s total exports are traded within Africa: trade barriers between African nations are the highest in the world.
Toboc Trade News