THE ECOWAS TRADE LIBERALIZATION SCHEME AND THE GHANA INVESTMENT PROMOTION CENTRE ACT 478: GHANA- NIGERIA TRADE WARS BY QUAKERS KARIBO GEORGE (10213393) THIS DISSERTATION IS SUBMITTED TO THE UNIVERSITY OF GHANA, LEGON, IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF THE MASTER OF ARTS DEGREE IN INTERNATIONAL AFFAIRS LEGON AUGUST 2014 University of Ghana http://ugspace.ug.edu.gh University of Ghana http://ugspace.ug.edu.gh
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THE ECOWAS TRADE LIBERALIZATION
SCHEME AND THE GHANA INVESTMENT
PROMOTION CENTRE ACT 478: GHANA-
NIGERIA TRADE WARS
BY
QUAKERS KARIBO GEORGE
(10213393)
THIS DISSERTATION IS SUBMITTED TO THE UNIVERSITY OF
GHANA, LEGON, IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE AWARD OF THE MASTER OF
ARTS DEGREE IN INTERNATIONAL AFFAIRS
LEGON AUGUST 2014
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i
DECLARATION
I hereby declare that this work is the true record of my research, except for references to the
works of other authors that have been cited and duly acknowledged. I assume full
responsibility for any lapses in this work.
……………………………… …………………………….
QUAKERS KARIBO GEORGE DR. V. ANTWI-DANSO
(STUDENT) (SUPERVISOR)
DATE:…………………….. DATE……………………..
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DEDICATION
This work is dedicated to my parents Mr & Mrs Bortei George Quakers, my grandmother
“PSG” who instilled in me the virtues of hard work, to my twin sister, Lucy George Quakers
and brother Tawiah Bortei George who encouraged me.
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ACKNOWLEDGEMENTS
I am grateful to the almighty God for seeing me through this programme. I also express my
sincere gratitude to my supervisor, Dr. V. Antwi-Danso who lent his great academic expertise
to this work and repeatedly corrected and encouraged me to push on.
Special thanks goes to the staff members and faculty of the Legon Centre for International
Affairs and Diplomacy for their kind words and encouragement through this course. I also
like to thank those who took the time to help me with pointers and encouragement. In
particular Tracy Mensah, Michael Yekple, Sarah Yeboah and Senyo Gbedawo.
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LIST OF ABBREVIATIONS
CBD Central Business District
CEAO West African Economic Community
CEPS Customs Excise Preventive Services
ECOWAS Economic Community of West African States
EEC European Economic Community
ETLS ECOWAS Trade Liberalization Scheme
EU European Union
FTA Free Trade Area
GIPC Ghana Investment Promotion Council
GUTA Ghana Union of Traders Association
MRU Mano River Union
NAFTA North American Free Trade Area
NANTS National Association of Nigerian Traders
NIPC Nigerian Investment Promotion Council
NLC National Liberation Council
NUTAG Nigerian Union of Traders Association
PP Progress Party
SALT I & II Strategic Arms Limitation Treaty One and Two
START Strategic Arms Reduction Talks
UEMOA Union Economique et Monétaire Ouest Africaine
UN United Nations
WB World Bank
WWII World War Two
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TABLE OF CONTENTS
Declaration…………………………………………………………………………….i
Dedication…………………………………………………………………………….ii
Acknowledgements…………………………………………………………………..iii
List of Abbreviations…………………………………………………………………iv
Table of Contents……………………………………………………………………...v
Abstract……………………………………………………………………………...viii
CHAPTER ONE:
THE RESEARCH DESIGN
1.0 Background of the Study…………………………………………………………1
1.1 Statement of Research Problem…………………………………………………..4
1.2 Objectives of the Research……………………………………………………….6
1.3 Significance of the Research……………………………………………………..6
1.4 Hypothesis………………………………………………………………………..7
1.5 Rationale of the Study……………………………………………………………7
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that was given an observer status had formed CEAO in 1973. CEAO was a free trade area
that also had the plan to develop into a customs union in twelve years.
The formation of the ECOWAS community marked the formation of a collective front by the
member states to address the economic problems that plagued them. There was also a sense
of accomplishment by the main protagonists of the regional integration drive, Nigeria and
Togo. The Head of State of Ghana at the time, General Kutu Acheampong, understood the
relevance of ECOWAS. This can be gleaned in his pronouncement that: “the major purpose
for the formation of the community was to remove centuries of division and artificial barriers
imposed on West Africa from outside, and to recreate together the kind of homogenous
society, which existed before the colonialist invaded our shores.”3
Okolo asserts that the Economic Community of West African states was the most significant
attempt at integrating all the countries in the sub-region into a feasible economic structure.4 It
was created to engineer closer economic ties among member states. The Treaty of Lagos
provided commitments that were to be achieved within a structured timetable. The Treaty
deals with key areas of integration, like fiscal harmonisation, tariff freeze, trade liberalization
and agreements for common external tariffs. In addition, there were other unscheduled
obligations to ensure viable West African economic integration, which also entails steps to
ensure industrial cooperation.5
The Treaty of ECOWAS is elaborate, modelled on the Treaty of Rome. The member states
left the agreement for the more substantive issues to be resolved later. Although there are
precedents to such an integration approach, it has not been pursued so intently. This
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approach, whose basis is found in functionalism, fails to directly address difficulties, but
rather puts it off for later.6
2.2 Stages of Integration
According to Antwi-Danso,7 there are four essential stages involved in achieving a regional
bloc:
a) Free Trade Area (FTA): In this stage, member states eliminate trade barriers
among them, but continue to keep their separate national barriers while trading
with the outside world. In this stage, customs officials must still police the borders
in order to prohibit or tax trade or goods that would hitherto be exempt from such
restrictions or taxes. Examples include the North American Free Trade Area
(NAFTA) and European Free Trade Area.
b) Customs Union: In this stage, there is the removal of trade barriers by member
states among themselves and they also adopt collective set of barriers for goods
coming from third countries. By so doing, inspections by customs at the border
are eliminated. An example of this degree is the European Economic Community
(EEC), between 1957 and 1992.
c) Common Market: At this stage, member states allow for the free movement of
goods, services, persons and capital, or free factor flows among member states, in
addition to the existence of a customs union. The EU did not achieve this stage of
integration until the end of 1992.
d) Full Economic Union: In this stage, member states unify their economic policies:
fiscal, monetary and welfare. They also unify policies that deal with trade and the
flow of the factors of production. The European Union has achieved full unity of
economic policies even though governments continue to keep their tax autonomy.
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There has also been the achievement of a monetary union even though Great
Britain continues to use its own currency.
Both Customs Union and Free Trade Areas are simply trade blocs. It is easier to achieve this
kind of integration, compared to common markets or full unions.8 The scheme designed by
the member states of ECOWAS to achieve the objective of the regional bloc is the ECOWAS
Trade Liberalization Scheme (ETLS). The ETLS was to serve as the foundation for the
achievement of a customs union, one of the central objectives of the community.
2.3 The ECOWAS Trade Liberalization Scheme (ETLS)
There is, in principle, the free movement of persons, goods, capital and service within a
customs union. It is in recognition of this principle that, the ECOWAS Trade Liberalization
Treaty (ETLS), was signed by the leaders of member states in 1979. The nationals of member
states were to be regarded as “community citizens”.9 The free movement of persons and
goods is the most popular aspect of the ECOWAS Treaty. This is because, prior to the
implementation of the ETLS, the community had achieved little, in terms of its aims and
objectives. Therefore, the implementation of the ETLS that made possible the free movement
of persons, goods and services was seen as a giant step towards the realization of the
objectives of ECOWAS.10
The signing of the Protocol was, however, met with hostility in relatively more developed
member states, as citizens of the more developed countries feared that the influx of
community citizens would inundate the job market thereby leading to less pay. This
trepidation was high in Nigeria and Ghana. In Nigeria, between 1983 and 1985, there were
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expulsions of community citizens. While in Ghana, the government justified its decision to
close its border in September 1982.11
While the implementation of the ETLS is significant, largely because it led to the removal of
visa requirement for community citizens for short-term visits to any member state, it did not
address all the problems with respect to the free movement of persons. The ETLS is only
beneficial to the few, who possess travel documents. It failed to cater for such groups as the
Mossi migrant workers or the Hausa-Fulani, who before its implementation travelled across
the sub-region with little difficulty, without travel documents.12
Besides, the elimination of
other obstacles to the movement of persons, while in the territory of member states, was left
to the discretion of the host governments.13
The ECOWAS Treaty seeks, in its objectives, among other things, to work towards the
creation of a common market. It highlights the following:
I. The liberalization of trade, by the abolition among member states, of customs duties
levied on the imports and exports, and the abolition among member states, of non-
tariff barriers, in order to establish a free trade area at the community level;
II. The adoption of a common external tariff and, a common trade policy vis-à-vis third
countries;
III. The removal, between member states, of obstacles to the free movement of persons,
goods, services and capital, and the right of residence and establishment.14
2.4 The ECOWAS Protocol on the Free Movement of Persons
Free movement of persons is one of the key provisions under the ETLS. Major steps towards
the achievement of this objective were taken in Dakar, Senegal, in 1979. In Dakar, member
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countries agreed that community citizens had the right of entry, residence and establishment
in all member states of the community. In furtherance of this, the Protocol on the Free
Movement of Persons, Residence and Establishment was signed on May 29, 1979.
The tenets of the Protocol were to be achieved in three complementary phases, to be achieved
within five years of each other (cumulatively fifteen years). The first phase is the right of
entry; the second phase is the right of residence; and the third phase is the right of
establishment within the territory of all member states. Additionally, at the Dakar summit,
there was the freeze in the payment of customs duties on goods that originates in any member
state of the community for two years, as the first step towards the establishment of a Free
Trade Zone in 1989.15
2.5 The Protocol Relating to Free Movement of Persons, Residence and
Establishment – Phase One
Phase one of the Supplementary Protocol of 1979, deals with the abolishment of all
restrictions with respect to the free movement of persons within the sub-region. This
includes, inter alia, the removal of visa requirement and granting the right of entry to
community citizens. According to Article 3 of the Protocol, community citizens only require
a “valid travelling document and an international health certificate”16
to be able to enter into
the territory of a member state, and reside for a maximum of ninety days.
It is only at the expiration of the ninety days that a community citizen is required to seek an
extension permit from the appropriate authorities of the host state. This means that while a
community citizen is permitted entry into a member state for ninety days, he needs to get the
relevant documents that would allow for continual stay in the country, after the initial ninety
days.17
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While community citizens enjoy right of entry, Article 4 of the Supplementary Protocol
reserves a member state the right to refuse entry into its territory to any community citizen
who does not meet the provisions of its national immigration laws. Such an individual is
deemed an “inadmissible immigrant”.18
The Protocol also provides in later Articles,
provisions that would facilitate the means of transportation of the community citizens. The
main aim of the Protocol in effect, is the removal of all hindrances to the free movement of
community citizens within the community. Additionally, lessons from the implementation of
the first phase were to serve as a guide to the implementation of the second and third phases
of the ETLS.19
2.6 Challenges with the First Phase, the Right of Entry
The free movement of persons is the most popular and frequently emphasized achievement
by leaders of ECOWAS member states. It was for them, the litmus test that the “new-born
babe of yesterday is now able to walk on its own.”20
This first phase, however, was met with
a lot of difficulties, brought about by two reasons. One was that, the Protocol was silent on a
situation where community citizens stayed beyond the stipulated ninety days period without
seeking extension from the host state; a situation not uncommon in the West African sub-
region. Although this problem was prevalent in the initial stages of the Protocol, according to
Essuman-Johnson, the issue of community citizens continuously being resident in member
states after the initial ninety days still persists.21
Common practice suggests that, such
individuals are left to the discretion of the immigration laws of the host state.
Furthermore, member states are often not totally dedicated to the implementation of the
Protocol, this led to the expulsion of community citizens, due to the economic situations in
the individual member countries. The underlining cause of this challenge is that, there is a
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huge disparity in the level of economic development and level of industrialization between
member states. In this regard, countries such as Nigeria, due to the huge wealth brought about
by high price of oil, attracted large numbers of community citizens from ECOWAS. Host
governments feel threatened in such circumstances, especially with regard to job security and
economic opportunities for their own citizens,22
leading to the expulsion and prohibition of
entry to community citizens into member states. Due to the challenges this posed to the
implementation of the first phase of the Protocol, some scholars, such as Afolayan opines
that, “it was perhaps a mistake to have advanced a free movement policy in ECOWAS before
economic achievements could ensure there would be no backlash.”23
Besides, member countries’ expectation of gains to be derived from the implementation of
the Protocol was consequential for the smooth implementation of the first phase of the
Protocol. The case of Nigeria is particularly telling in this regard. While Nigeria’s role in the
formation of ECOWAS is well documented,24
as it pursued a very vibrant foreign policy goal
that led to the formation of the sub-regional body, it hoped to gain from the formation. In the
1962-68 development plan, the Nigerian government sought to make Nigeria the leader in the
formation of the sub-regional organisation. They sought to make Nigeria, “the industrial heart
of an African common market.”25
Successive governments after that made it a high foreign
policy goal. However, Nigeria’s conduct over the years does not suggest that its foreign
policy objectives of playing a leading role in ECOWAS have been met.
The decision by the government of the then President of Nigeria, Shehu Shagari, to expel
community citizens from member states without ample warning is case in point. According to
Brown, the expulsion was both a “lightening bolt from the blue” and the largest expulsion of
people since the nineteenth century.26
Lynne Brydon adds that the governments that were
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affected were not given adequate notice by the Nigerian government.27
Afolayan posits that
three reasons served as precipitating factors to Nigeria’s expulsion of community citizens.
These included; legal loopholes in the Protocol, the situation in ECOWAS, and the socio-
political situation in Nigeria.28
According to him, in terms of the legal loopholes, the Protocol did not address what steps
were to be taken if a community citizen stayed beyond the ninety days. This meant that,
action to be taken in such a situation was left to the discretion of the individual national
immigration laws of member states. Also, the situation in ECOWAS also contributed to the
expulsion, this was because the sub-regional economic body still had substantial work to do
to be become fully effective. There was also the lack of adequate commitment by member
states; this meant that the aims of the body were met with considerable challenges that
impeded implementation. Finally, the socio-political situation in Nigeria also contributed to
the expulsions, as foreigners were held as being the cause of the various incidence of
violence that Nigeria was experiencing at the time.29
In Free Movement of Persons in ECOWAS and Nigeria’s Expulsion of Illegal Aliens, Okolo
notes that in 1983, a number of West African countries expelled en masse community
citizens from their countries. He notes that among them were, Senegal, Sierra Leone, Ghana
and Nigeria. Though the actions of the all the aforementioned member states were against
community citizens, the scale of Nigeria’s action made it stand out.30
It affected a large
number of community citizens from the member states of ECOWAS. The expulsion from
Nigeria took place intermittently from 1983-1986.31
The actions of these countries can be
interpreted as the needs of their expected gains from the implementation of the first phase of
the Protocol not being met.
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2.7 Implementation of the Second Phase
The Second Phase of the Protocol on the Free Movements of Persons, Right of Residence and
Establishment was signed on the 1 July 1986. The signing was testament to the desire of the
member states of ECOWAS to give a legal backing to the residence of community citizens
within the community, and their desire to work with the fifteen years that they had scheduled.
The Supplementary Protocol of 1986, defines the right of residence as; “the right of a citizen,
who is a national of one of Member States to reside in a member state other than his state of
origin, and which issues him with a residence card or permit that may or may not allow him
to hold employment.”32
It adds that, “a residence permit means any document issued by the
competent authorities in the territory of a member state granting right or residence in the
territory of a member state”.33
The Protocol also made provisions for various classes of
citizens, that is; border workers, seasonal workers and itinerant workers.34
The Right of Residence gave community citizens the right of residence in the territory of
member states so that they could seek and carry out income earning employment. The
Protocol also gave the grounds that a community citizen can be restricted the right of
residence. The justifications are: if the right of residence was against public order, public
health, and public security.35
As stipulated in the Protocol of entry, the signing of the right of entry within a timetable was
to allow the commission to use the experiences gained from the first phase to be used in the
subsequent phases. The problems that beset the first phase were addressed in the second
phase. That is, the en mass expulsion of community citizens who failed to legally extend their
stay. The Protocol provides for the protection of community citizens against arbitrary or
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collective expulsions. It adds that community citizens can only be expelled on a case-to-case
basis. Community citizens cannot be affected by en masse or collective expulsions.36
This
provision was made to avert the mass expulsion of community citizens, as was the case in
some member countries in the early to mid-1980s.
2.8 Implementation of the Third Phase: Right of Establishment
The Heads of State of the member states of ECOWAS signed the Third Phase of the Right of
Entry, Residence and Establishment on May 29, 1990 in Banjul, the Gambia. It was the final
phase of the ECOWAS Protocol on free movement of persons among member states. The
Right of Establishment is defined thus:
The Right of Establishment means the right granted to a citizen who is a national of
one Member State to settle or establish in another Member State other than his state of
origin, and to have access to economic activities, to carry out these activities as well as
to set up and manage enterprises, and in particular companies, under conditions
defined by the legislation of the host Member State for its own nationals.37
Article 4 of the Protocol on the Free Movement of Persons, Right of Residence and
Establishment provides measures that can be taken when discriminatory measures have been
put in place by a member state against the nationals of another member state. Article 4(1) of
the Protocol prescribes that member states shall accord non-discriminatory treatment to
nationals of other member states. Failure to observe the aforementioned, in a specific activity
allows for the member state whose nationals are being discriminated against to accord
discriminatory treatment to nationals from the other member state.38
2.9 Challenges to the Implementation of the ETLS
One of the problems that beset the ETLS in its earlier years was the failure of member states
to ratify the Treaty. The Vienna Convention on the laws of treaties defines ratification as a
process whereby “a state establishes on the international plane its consent to be bound by a
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treaty”.39
Although the Treaty of Lagos had been signed by the member states of ECOWAS,
other subsequent decisions or Supplementary Protocols require individual ratification from the
member states of ECOWAS. The Protocol requires that at least seven member states ratify it
before it enters into force.40
However, until the early 1990’s, just one Protocol had been duly signed by all the member
states of the community, while half had been signed by eight member states. To reverse the
trend, the Authorities of the Heads of State and Government, which is the highest decision
making organ of ECOWAS, put up Decision A/Dec. 6/5/90 on the Ratification of Protocols
and Conventions, which stated that, “all Member States should ratify all outstanding Protocols
and Conventions signed by the Heads of States and Government and deposit the instrument of
ratification with the Executive Secretariat by 30 December, 1990”.41
This action mitigated the
problem of ratification.
The tenets of trade liberalization also requires that member states coordinate and harmonize
their municipal laws, a point that is required by the Treaty of Lagos. To further this aim,
harmony of the municipal emigration and immigration laws is important as well as the
creation of the synchronized tax rate among member states. This however, has not been the
case, as demonstrated by disputes arising from conflict between municipal laws of member
states and the tenets of the ETLS. Much of the Ghana-Nigeria trade war is within the context
of the conflict between municipal laws and the ETLS, as well as the assertions of national
interest of both countries that affects the smooth implementation of the tenets of the ETLS.
2.10 Ghana-Nigeria Trade War
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As already stated before, the ETLS is the legal framework that governs the movement of
persons, goods, services and capital among the member states of the ECOWAS. The ETLS
specifies the criteria for the nature of goods that are allowed by member states of ECOWAS
into their territory. In the early 2000’s, there existed a very cordial relationship between
Ghana and Nigeria. The cordial relations notwithstanding, that existed between Ghana and
Nigeria, the later imposed restrictions on the importation of a number of goods into her
market by the former.
2.11 Ghana-Nigeria Trade Relations from 2000-2012: An Era of Increased
Cooperation and the Birth of a “Trade war”
Nigeria returned to democracy in May 29, 1999, after General Abdulsalami Abubakar handed
over power to the democratically elected leader, Olusegun Obasanjo. President Kuffour on the
other hand, was sworn in as the President of Ghana after he won the democratic elections of
2000. This period is regarded as a period of cooperation between both countries. Ghana at the
time was also consolidating its democracy, evidenced by the smooth transfer of power from
one political party to another, a significant step in its democracy. The leaders of both countries
were immensely cordial to each other.42
There existed a kindred spirit between both leaders,
which washed-off into all spheres of intercourse between both states; it was the best of times.
It was so cordial that President Kuffour named a road after the Nigerian president, the
Olusegun Obasanjo Express Road.
Ambassador D. K. Osei, the then Secretary to President Kuffour, described their relationship
thus:
The relationship between Presidents Kuffour and Obasanjo was so personal that they could
discuss all issues by phone on daily basis. For example, the issues of first consignment of
oil as well as the police patrol vehicles for the Ghana Police Service, from Nigeria
immediately President Kuffour assumed office in 2001, were discussed on telephone by the
two leaders. This kind of relationship even rendered the Foreign Ministers of both states
redundant as they only took instructions to follow up on what the two leaders had already
discussed by phone.43
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The relationship was highly beneficially for both countries. Analyses of the volume of trade
between them during the period showed a tremendous increase. It left a very healthy balance
sheet for both countries. Evidence of this is seen in the total volume of trade between both
countries in terms of exports. In 2008, the official volume of trade between Ghana and Nigeria
was put at $525 million; a breakdown of the components of trade for the period accounts that
Nigeria had $89 million non-crude oil exports to Ghana, Ghana on the other hand, recorded
$25 million exports to Nigeria. In the same vein, Nigerian businesses accounted for sixty
percent of foreign investment in Ghana from Africa. Analysts are of the opinion that the trend
would continue, further entrenching the robust economic connection between both countries.44
This relation was highly beneficially for Ghana since she received police patrol vehicles and
oil supplies at concessionary rates. Their infusion of good governance and democracy
culminated in both countries participating in the G-8 summits. Working in tune with their
burgeoning bilateral relations, there was also an increase in cooperation within ECOWAS.
However, tensions in the relations between the two countries re-emerged once more. In 2006,
Nigeria placed a ban on the importation of goods from a number of countries in West Africa,
including Ghana. In Ghana this came as a shock, two reasons account for this. First, it was
not in tune with camaraderie that existed between the Presidents of both countries. Secondly,
Nigeria is a signatory of the ECOWAS Protocol on the free movement of goods, persons and
services. Nigeria’s action was to serve a precursor for a trade war. The ban produced a
serious stir in Ghana; some politicians demanded reciprocal ban on Nigerian goods. The
Kuffour government registered its displeasure to the ban, arguing that the ban contravened
the ECOWAS Trade Liberalization Scheme. The Nigerian government in order to allay the
concerns of Ghana took steps to reduce the number of banned Ghanaian goods. It asked the
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Ghanaian government to furnish it with a list of the products that were banned, which it duly
received, and this led to the ban placed on some products to be rescinded.45
Nigeria’s ban on products from member states of the ECOWAS, as has already been
mentioned, affected Ghanaian products. Providing the rationale for the ban, the Nigerian
government argued that the action was taken to prevent the influx of cheap products and to
diversify the economy. The banned products included textiles, rice, poultry etcetera. The only
Ghanaian export that was not affected was salt. This is because Nigeria needs salt for its
petroleum industry.46
On the other hand, there were the imposition of levies by the Ghanaian government, directed
at Nigerian movie directors and actors who came to Ghana to shoot movies. The government
placed a levy of $5,000 on them. The matter came up for discussion in the Nigerian House of
Representatives when a Member of the House, Olajumoke Okoya-Thomas, raised the motion.
Another Member of the House, C.I.D Maduabum, made the point that Nigeria should use the
“principle of reciprocity”.47
He added that, Nigeria should tax Ghanaian movie directors and
actors who came into Nigeria to shoot movies, as well as, place levies on Ghanaian movies
entering Nigeria.48
Since 2006, there have been actions by both governments to target goods and services from
the other country. In early 2010, the Nigerian telecommunication company Globacom
expressed its unhappiness with the treatment the company was receiving in Ghana,
threatening to pull out. The Bank of Ghana also demanded that banks raise their capital base
to GHC60 million by the 2010, local banks, were however, given an extended grace period of
two years.49
The healthy trade relations between Ghana and Nigeria had seen the influx of
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Nigerian banks to Ghana; creating jobs for Ghanaians as well as further strengthening Ghana-
Nigeria bilateral trade relations.
Trade relations between Ghana and Nigeria were further strained with the inception of
President John Atta Mills’ government in 2009. Two reasons account for this. First, there was
an alleged move by the Ghanaian government to enter agreements to acquire crude oil
supplies from Equatorial Guinea, a move that would have seen Ghana renege on an earlier
agreement with Nigeria. Secondly, Ghanaian businesses were complaining of the stiff
competition they were facing from the foreign businessmen that threatened to drive them out
of business.50
The attempt by the Ghanaian government to restrict Nigerian businessmen in
order to aid Ghanaian businesses was seen by the Nigerian traders as being discriminatory to
them.
The Ghanaian government argued that the support was necessary because Nigerian
businessmen had used the rapport that existed between Presidents Kuffour and Obasanjo to
venture into sectors of the economy that is reserved for Ghanaians. Since Nigeria’s action in
2006, there has been a ramping up of trade barriers placed by both countries on various goods
and services emanating from the other country. Though tensions between the two countries
escalated with the ban on Ghanaian goods entering Nigeria and Ghana’s counter actions, both
countries took steps to mitigate the situation. This saw them establish a joint task force that
was drawn from the Ministries of Trade of both countries, to help remove the bottlenecks
placed on products from both countries that are properly registered within the framework of
the ECOWAS Trade Liberalization Scheme, and give these products access to their
markets.51
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On February 20th
2012, the Ghanaian government issued a warning to foreigners involved in
retail trade in places designated as markets. Adding that, these foreigners should cease their
activities after a four-month grace period, as it was in contravention of the GIPC Act 478,
1994. The enforcement of the directive by the Ghanaian government affected Nigerian
traders in Ghana. The enforcement of the directive by the Ghanaian government represents a
new twist in the trade war between the two countries. This will be addressed in the
subsequent chapter.
2.12 Conclusion
The sub-regional body ECOWAS was formed by the countries of West Africa to enable them
present a concerted effort at changing the condition of dependence, underdevelopment and
poverty that was prevalent in these countries. The defining factor of the union was the
implementation of the ECOWAS Trade Liberalization Scheme. The Scheme allowed for the
free movement of goods, services, capital and persons. To effect the free movement of
persons, there has been the signing and ratification of the right of entry, residence and
establishment. These three complimentary Protocols were to help engineer the creation of a
closer regional organisation that is to move ECOWAS from a community of states to a
community of citizens. There have been complications with regards to the implementation of
the Protocol in Ghana-Nigeria trade relations culminating in a birth of a trade war. This trade
war has been a feature of Ghana-Nigeria trade relations since 2006, and has affected the free
flow of trade between both countries. Since then, both countries have continued to place
barriers to trade against each other.
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ENDNOTES
1 Omorogbe, Y. (1993). The legal framework for economic integration in the ECOWAS region: An analysis of
the trade liberalization scheme. Hein Online, p. 355. 2 Ibid.
3 Onwuka, R. I. (1980). The ECOWAS Treaty: Inching towards implementation, The World Today, Vol. 36, No.
2, (Feb., 1980), p. 52. 4 Okolo, J. E. (1985). Integrative and cooperative regionalism: The Economic Community of West African
States. International Organization, Vol. 39, No. 1 (Winter), p. 123. 5 Robson, P. (1985). Regional integration and the crisis in sub-Saharan Africa. The Journal of Modern African
Studies, Vol. 23, No. 4 (December), p. 610. 6 Ibid p. 610-611.
7 Antwi-Danso, V. (2009). Regionalism and regional integration: prospects and challenges (Making the
ordinary Ghanaian active in the integration process) in Ghana in Search of Regional Integration Agenda, pp.
69-70. Friedrich Ebert, Stiftung, Ghana. 8 Ibid p. 70.
9 Onwuka, R. I. op. cit. p. 54.
10 Davies, A. (1983). Cost-benefit analysis within ECOWAS. The World Today, Vol. 39, No. 5 (May), p. 171.
11 Okolo, J. E. op. cit. Integrative and cooperative regionalism: the Economic Community of West African
States, p. 144. 12
Bach, D. C. (1983). The politics of West African economic cooperation: C.E.A.O and ECOWAS. The Journal
of Modern African Studies, Vol. 21, No. 4 (December), p. 615. 13
Okolo. J. E. (1984). Free movement of persons in ECOWAS and Nigeria’s Expulsion of illegal aliens. The
World Today, Vol. 40, No. 10 (October), p. 428. 14
ECOWAS Revised Treaty 1993. 15
Bach, D. C. op. cit. p. 613. 16
Produced in Protocol A/P.1/5/79 relating to the free movement of persons, residence and establishment.
Retrieved from http://www.comm.ecowas.int/sec/index.php?id=ap010579&lang=en. 17
Ibid 18
Ibid. 19
Ibid 20
Davies, A. op. cit. p. 171. 21
Essuman-Johnson, A. (2006). Immigration to Ghana. Journal of Immigrant and Refuge Studies, 4:1, p. 66.
doi: 10. 1300/ J500v04n01_05. 22
This was the case in Ghana in 1969-70 when the governments instituted measures to secure the employment
of Ghanaians. In the 1983-85, Nigeria also put in places similar measures that led to the expulsion of illegal
aliens. 23
Afolayan, A. A. (1988). Immigration and expulsion of ECOWAS aliens in Nigeria. International Migration
Review, Vol. 22, No. 1 (Spring), p. 14-15. 24
Ojo, O. J. B. (1980). Nigeria and the formation of ECOWAS. International Organization, Vol. 34, No. 4
(Autumm). p. 571-604. 25
Ibid. p. 573. 26
Brown, L. M. (1989). Nigeria and the ECOWAS Protocol on the free movement and residence. The Journal of
Modern African Studies, Vol. 27, No. 2 (June). p. 252. 27
Brydon, L. (1985). Ghanaian responses to the Nigerian expulsions of 1983. African Affairs, Vol. 84, No. 337
(October), p. 563. 28
Afolayan op.cit. p. 14-15. 29
Ibid. p. 14-17. 30
Okolo J.E op. cit. Free movement of persons and Nigeria’s expulsion of illegal aliens, p. 428 31
Afolayan op. cit. p. 4-27. 32
Produced in the Supplementary Protocol A/SP/.1/7/86 on the second phase (right of residence) of the protocol
on free movement of persons, the right of residence and establishment. Retrieved from
HISTORY OF GHANA’S USE OF RESTRICTIVE LEGISLATION AND THE
ENFORCEMENT OF THE GIPC ACT 478
3.0 Introduction
This chapter seeks to examine the history of Ghana’s use of restrictive legislation, as it gives
a historical background to the GIPC Act and its subsequent enforcement by Ghana. It also
presents the enforcement of the GIPC Act in 2012 and the effects of that action on Ghana-
Nigeria trade relations.
3.1 History of Ghana’s Use of Restrictive Legislation
The first decades after African countries gained independence saw the proliferation of the
enactment of restrictive legislation by African countries. This measure was taken to reduce
the amount of foreigners that held business concerns in the economy. It is a measure that had
been used in Europe and the US to help citizens or their companies have a firmer footing in
their domestic economies.1 One of the major drawbacks of foreign control of African
economies has been the expatriation of the profits from these countries thereby leaving them
in perpetual poverty. To combat the trend, most African countries initiated dual measures to
rein back and check foreign involvement in their economies. They tightened immigration
laws to stem the indiscriminate entry of foreigners into their countries while simultaneously
enacting legislation that restricted foreign involvement in specific sectors of economy. In
Ghana, after Nkrumah, both measures were effected. These legislations were used generally
to censor places where foreign involvement was prohibited or the goods in which they could
not trade in as exemplified in Kenya and Ghana.2 The use of restrictive legislation, though
more widespread after independence, can be traced to colonial times.
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The year 1957 saw the independence of the first African country south of the Sahara, Ghana.
The independence of Ghana spelt a watershed for Africa as it saw the opening of the
floodgates for African nationalists to clamour for, and ultimately gain their independence.
However, these newly independent African countries found themselves faced with remnants
of colonial economies left by their colonial governments and the reality of significant
portions of their domestic economies under foreign control. Foreigners controlled significant
portions of the extractive, production, distributive, small and medium scale and retail trade.
This situation left the domestic economies of most African countries to foreign manipulation.
African countries constrained by poverty, illiteracy and underdevelopment were adversely
affected by the activities of these foreigners that left indigenes with insignificant portions of
their economies.
To remedy the situation, African countries resorted to the use of restrictive and protective
legislation. These legislations were primarily aimed at sectors of the economy that required
uncomplicated technological input or minimal capital. Though many African countries took
this measure, few countries took the more drastic step of expelling foreigners. These
expulsions considerably affected Indians and Lebanese who were usually the most
represented. Such expulsions were meet with approval by citizens because it helped create a
foothold for them. The most striking example was the decision of General Idi Amin of
Uganda to expel Asians who possessed British passports, an order that would later envelope
Asians with Ugandan passports or who had naturalised.3
According to Tony Killick, Ghana was initially an exception to the rule. Under her first
President Kwame Nkrumah, foreign involvement in all sectors of the economy was meet with
indifference.4 Ghana at the time had a huge external reserve mainly due to the high price of
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its main export earner cocoa. Cocoa was lucrative in the world market but its production was
also considerably labour intensive. This created the need for more labourers, skilled or
unskilled. The demand for labour led to large influx of migrants from across Africa, West
African migrants were highly represented. The symbiotic nature of migrant-Ghana relations
meant that they were allowed to flourish. Additionally, Ghana’s comparative politically
stability also acted as a pull factor for most immigrants who were from politically unstable
countries.5
The GIPC Act 478 is not the premier restrictive legislation in Ghana. The use of this kind of
legislation can be traced back to 1947, set up first by the colonial government. The
government was forced to initiate this measure after agitations by veterans of the Gold Coast
Army who had fought alongside the British in WWII raised concerns on their return to the
Gold Coast fully aware of the economic policies that were at work in other parts of the
world.6 Following this, the Governor in Council enacted the first indirect piece of legislation
that controlled the entry of foreigners into the Gold Coast. This law sought to restrict entry to
those whose intended occupation would be detrimental to Gold Coasters, particularly those
who were involved in the small-scale sector. The law affected non-Africans, especially
Indians, Syrians and Lebanese. According to the government, this was done, “to ensure that
the indigenous population is allowed to progress without the eventual complications of
pressure from powerful and strongly entrenched non-African interest, not only in the political
sphere, but also in the commercial and economic spheres.”7
Drawing from the above, it can be gleaned that the law was enacted to prevent unhealthy
competition from foreigners entering the colony. Additionally, the law further prohibited the
establishment of new trading activities or the expansion of already existing ones without the
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explicit permission of the colonial government. These provisions would be replicated in later
legislations.
3.2 The Use of Restrictive Legislation in the Nkrumah Years
At independence, Kwame Nkrumah was concerned with placing the Ghanaian economy on a
shore footing. His policy of promoting the economic independence of Ghana 8 did not see him
enact legislation that would drastically check the activities of foreign entrepreneurs in the
country. He, however, announced that foreign involvement would be curtailed in the future
when he stated thus:
In the future, the private small-scale personal enterprises sector will be exclusively
reserved for Ghanaians. Foreign concerns already established in this sector will be
allowed to continue operations, on the condition that they do not expand their present
establishment and scale of operation. In the future, therefore, there will be no room for
overseas interests in small-scale enterprises sectors in Ghana.9
Killick posits that Nkrumah had initially believed that strengthening the Ghanaian
entrepreneurial class would be beneficial for Ghana; he later changed his mind, as it would
have taken a long time.10
Furthermore, two reasons may have further dampened his zeal. First,
he did not enact legislation for ideological reasons (enacting such legislation would have gone
against the creed of Socialism). Secondly, it would have led to the creation of a Ghanaian
entrepreneurial class that he feared would later threaten his political power.11
Nkrumah’s remedy for usurping foreign control of the economy was the establishment of state
controlled enterprises. His nationalism did not make him to stride to the extent of enacting
legislation to assist Ghanaian businessmen. Though never enthused by foreign control of the
economy, he was antipathetic to Ghanaian businessmen, although a few Ghanaian
entrepreneurs were, however, supported if they operated within a socialist framework.12
Nkrumah only paid lip service to the plan of restricting foreign involvement in small-scale
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sectors of the economy. The reasons for his indifference have been outlined, his
foreshadowing of such a move in the future, would see subsequent governments especially the
National Liberation Council (NLC) and the Progress Party (PP) take more concrete steps at
tilting the scales in favour indigenous entrepreneurs.
3.3 The Use of Restrictive Legislation During the National Liberation Council
Administration
After 1966, there was a marked change in the Ghanaian government’s policy on the issue of
foreign involvement in the small-scale sector of the economy. Subsequent governments
pursued a truly Ghanaianization agenda, that is, the indigenization of the economy. The NLC
government laid the foundation for this and the PP government took it further.13
With the
overthrow of Nkrumah by the NLC, the new government sought to place the economy firmly
in Ghanaian hands. They laid emphasis on the creation and strengthening of a private
Ghanaian entrepreneurial class. To actualize this goal, they issued a decree that restricted
certain sectors as purely Ghanaian interests.14
This decree, the Ghanaian Enterprise Decree, 322, 1968 was instituted. It set out a five-year
timetable to achieve full Ghanaianization. This was the first direct legislation enacted in
Ghana to assist indigenous Ghanaians involved in the small scale, retail and petty trading
sectors of the economy to take control from foreigners. The decree gave certainty to the goal
of Ghanaianization.15
3.4 The Use of Restrictive Legislation During the Busia Administration
K. A Busia, leader of the Progress Party administration, was the most earnest government in
pursuing the goal of indigenization. Measures taken by the administration greatly expedited
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the pace of Ghanaianization. The promulgation of two laws accounts for this: the Aliens
Compliance Order and the Ghana Business (Promotion) Act.16
3.4.1 Promulgation of the Aliens Compliance Order
K. A. Busia took the reins of power in October 1969 after winning democratic elections. In
November of the same year, he promulgated the Aliens Compliance Order. The Order, gave a
fortnights notice to all aliens without residence permits, a directive to obtain one or leave.
This measure was at that point; the most pronounced action by any government at ensuring
that greater share of the economy was in Ghanaian hands. The promulgation of the order freed
up hitherto foreign held concerns in the business sector and in the formal sector. This action
enabled Ghanaians to have considerable influence over their economies.17
Subsequent
legislations however shifted from the expulsion of foreigners to the prohibition of foreign
involvement in certain sectors of the economy by making them exclusive Ghanaian interests.
3.4.2 Ghana Business (Promotion) Act 1970
The Ghana Business (Promotion) Act was a reinforced version of the Ghana Enterprises
Decree, 1968. The Busia administration, working with the goal of consolidating the gains
garnered from the promulgation of the Aliens Compliance Order, strengthened the law barring
alien participation in sectors of the economy that did not require significant capital,
technological know-how or managerial skill.18
According to Killick, among the
administrations top-four imperatives were the expedition of the Ghananization of economic
activities.19
While addressing the issue in parliament, Ofori-Atta noted that “at the time of independence
in 1957, perhaps, as much as 98 percent of the import and distributive trade was in the hands
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of non-nationals. Now in 1970, Ghanaians hold no more than about 20 percent of the import
trade”.20
The Ghana Business (Promotion) Act in effect barred foreign involvement in the
small, medium and wholesale trade and placed a ban on the expansion of already held foreign
concerns, a provision that was present in the indirect policy of the colonial government.
Part II of the Act further prohibited foreigners from being part of any retail or wholesale
trading enterprise. The operation of any enterprise with an annual turnover of five hundred
thousand cedis was made the preserve of Ghanaians, commencing from August 1, 1970.21
This also extended to commercial land transportation, advertising, beauty culture, bakery,
printing, manufacture of cement blocks for sale and produce brokerage. Additionally, the
purview of the Act placed a ban on selling in any place designated as a market, hawking,
selling from kiosk, petty and retail trade.22
The Ghanaian Enterprise Decree had outlined a five-year timetable to achieve the goal of total
removal of foreigners from the retail and small-scale sectors. This timetable was however,
remarkable reduced by the Ghana Business (Promotion) Act to a month, although the former
had been in place for two years, the timetable had been reduced by three-fifths (3/5th
) of the
timetable. This meant that, whilst the NLC government set the pace for Ghanaianization, the
PP government remarkably quickened the pace. It is worth mentioning that the purview of
these laws was focused on the small-scale sector, area that involved manufacture were not
affected.23
In 1975, Ghana under Col. Ignatius Kutu Acheampong was among the countries that were
founding members of the sub-regional body ECOWAS. Under the leadership of Dr. Hilla
Limann, the ECOWAS Protocol on the free movement of persons, goods and service was
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ratified. This saw a number of community citizens coming to Ghana with the desire to engage
in sectors of the economy that were subject to restrictive legislation. Though the
administration understood that membership to ECOWAS bolstered Ghana’s chances of
making economic progress, it was determined to check the rights the Protocol conferred on
community citizens because it was not convergent with public opinion.24
3.5 The Framework of the GIPC Act
The Ghana Investment Promotion Centre (GIPC) is a government agency created by the
GIPC Act, 1994 (Act 478). It was created to help streamline the operation of businesses and
to attract investments to Ghana. It is also charged with facilitating creation of the necessary
conditions to attract investors whilst ensuring an ambient, transparent and predictable
environment. The chief objectives of the centre is to:
(a) Create an enhanced, transparent and responsive environment for investment and the
development of the Ghanaian economy through investment; and
(b) Encourage, promote and facilitate investment in the country.25
The GIPC Act, as the legal investment regime within Ghana pronounces the provisions that
regulate foreign investment in various sectors of the Ghanaian economy. The Act also
designates special sectors and enterprises as an allotment of Ghanaian citizens. Articles 18 of
the Act, provides that certain enterprises are exclusively the preserve of Ghanaians thereby
barring foreign participation. Article 19 (1) and 2 of the Act however, provides conditions to
be met before foreign participation can be legal. First, the operation of a joint venture is legal
if a foreigner invests $10,000 or more in either goods and/or capital. Secondly, if a foreigner
holds exclusive ownership of an enterprise, he must invest $50,000 in goods and/or capital.
Thirdly, Article 19(3) of the Act provides that irrespective of paragraphs 1 and 2 of Article
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19, for a foreigner to be permitted to hold concerns in some sectors of the economy, either as
full or part owners, they are required to invest a minimum of $300,000 in goods and/or equity
and should, as a necessity, employ ten Ghanaians.26
The specificities provided for by Article 19(3), is the main provision that the community
citizens were accused of being in the wrong of. They were declared illegal traders by the
Ghanaian government because they failed to meet the provisions of the GIPC Act, and were
therefore told to cease their activities.27
This action was however met with a mixture of
support and calls for a rethink. The Ghanaian retail traders felt the law was in line because
foreigners engaged in the retail sector that is reserved for them, were outmuscling them. The
calls for a rethink came from Nigeria, the affected Nigerian traders, the ECOWAS
parliament,28
and the Ghanaian Think Tank IMANI Ghana. IMANI Ghana described the Act
as a “bundle of confusion”.29
The role of Think Tanks in strengthening the development of a
country’s governance structure has been argued elsewhere.30
The call for the rethink of the
Act that was initiated, especially by IMANI Ghana, resulted in the Parliament of Ghana
passing an amended GIPC Bill in 2013. However, the provision contained by the GIPC Act
478, 1994 that restrained foreign involvement in special sectors, and does not give special
dispensation to community citizens, is still held by the amended Act.
3.6 The Enforcement of the GIPC Act, 478 in 2012
The Ghana Investment Promotion Centre Act 478 1994 was enforced on the 20th
June 2012.
To effect its enforcement, the Ministry of Trade and Industry first constituted a special task
force in February 2012. The task force was composed of personnel of the Ghana Police
Service, Customs Exercise and Preventive Services (CEPS), Immigration, Trade Ministry, as
well as the affected Municipal and District Assemblies. The task force was tasked with
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sensitizing and informing foreigners involved in retail trading activities that did not meet the
minimum capital threshold to cease their activities. Additionally, they were to ensure that the
residence permits and tax payments of foreigners were current. The task force consequently
issued an ultimatum to all foreigners who fell short of the stipulated requirements the GIPC
Act to cease their activities after a “grace period” of four months. Mr Kofi Larbi, a Director
at the Trade Ministry and the Chairman of the task force, while addressing the media said
thus, “at the expiry of the grace period, we are going to be very firm. If it means closing
down shops, we will ensure that non-Ghanaians do not operate from markets, kiosks and that
they do not engage in any of the businesses which have been reserved for Ghanaians”.31
Consequently, at the expiration of the grace period the Act was duly enforced. The first round
of closure of shops took place on June 20th
2012. The affected Nigerian traders likened their
treatment to that experienced by Nigerians during the promulgation of the Aliens Compliance
Order in 1969.32
Nigerians were the most affected by the enforcement, a point that is
highlighted by the President of the National Association of Nigerian Traders, Deacon John
Igwe Ukala.33
On the day of the enforcement, the Nigerian traders on sighting members of the
task force locked up their shops. The officials of the task force, however, also locked the
shops with special security padlocks placing notices signed by K.N. Atuahene, which was
pasted on the shops with the heading addressed to non-Ghanaians that were engaged in retail
trading in market places. The notice read thus:
It has come to the notice of the taskforce that you are engaged in trading activities in the
market place. Your activity contravenes section 18 of the GIPC Law 1994 (Act 478). Please
take notice that your continuous operations from the market will no more be countenanced
and that your shop has been permanently closed from today. In case you have any difficulties
related to the actions of the task force please do not hesitate to contact the undersigned at the
Ministry of Trade and Industry.34
This enforcement action came as a surprise to Nigerians who had been involved in this trade
for decades. Similar warnings had been issued in the past but they had not been carried out.
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The decision of Ghana to enforce her trade law without a special dispensation being granted to
Nigerians, led to further strain in Ghana-Nigeria relations.
The affected Nigerian traders viewed the action of Ghana as being contrary to the rights that
the ETLS provides them. They, drawing from the definition of the right of establishment,
argued that their treatment should be in consonance with not only what the right of
establishment confers on them, but the Ghanaian government should take a cue from how
Ghanaians who are involved in retail trade were being treated in Nigeria. They also added that
the ECOWAS Protocol on the Free Movement of Persons provides that community citizens
within the sub-region were conferred with identical rights as nationals of any member state if
these community citizens were within its territory.35
The provision of the GIPC Act, however,
negates these rights, as it does not prescribe similar treatment for community citizens and
Ghanaians. There were also reports in Nigeria that Nigerians were being deported from
Ghana.36
These were later revealed to be untrue. After the enforcement of the GIPC Act in
2012, the Act was subsequently amended.
3.7 The Revised GIPC Act, 865, 2013
The GIPC Act 865, 2013 is the amended version of the GIPC Act 478, 1994. The Act
appears to strengthen the predecessor law in a way that is reminiscent of the Ghana Business
(Promotion) Act strengthening of the Ghanaian Enterprise Decree. This amendment in effect,
repealed the statute of the GIPC Act, 1994. True to the provisions of its predecessor Acts,
especially the aforementioned Ghanaian Business (Promotion) Act, it lists certain businesses
as areas that shall be devoid of foreign participation. This is provided for in detail in Article
27 of the GIPC Act 865, 2013.
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The Act lists the following concerns as reserved for Ghanaians: sale of goods or provisions in
the market, petty trading, hawking, selling of goods in stalls, operation of taxi or car hire with
cars not numbering up to twenty-one, beauty and barbering shops, printing of recharge cards
for telecommunication companies, production of exercise books and other stationaries, retail
of pharmaceutical products, engagement in the tripartite of production, supply and retail of
sachet water and the involvement in lotteries and pool betting except football betting. The
article also gives the Minister of Trade the power to amend the list.37
The GIPC Act 865 also provides grounds for foreigners being eligible to engage in certain
enterprises in the country, this is provided for in Article 28. Article 28(1a) provides that if a
foreigner is engaged in joint partnership with a Ghanaian, the Ghanaian citizen is required
own at least ten percent of the venture and the foreign should invest at least $200,000 in
goods and/or equity. Sub-section (b) of the same article provides that where a foreigner
exclusively owns an enterprise, he shall be required to invest at least $500,000 in goods
and/or equity. Paragraphs 2 and 4 of the same Article provides that the requirement for
foreign engagement in a trading enterprise shall be $1,000,000 in goods, cash or services and
such an establishment must employ at least twenty skilled Ghanaians.38
An analysis of the GIPC Act 865 shows that the minimum requirement for foreign
engagement in sectors of the economy has been increased. In the case of a partnership
between a Ghanaian and a non-Ghanaian, the requirement has increased from $10,000 to
$200,000. In the case of an enterprise that is exclusively owned by a foreigner, the
requirement has been increased from $50,000 to $500,000. And in the case of a trading
enterprise, the requirement has been increased from $300,000 to $1,000,000 with the required
amount of Ghanaians that should be in employment being increased from ten to twenty.
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The increase in the requirements placed on foreigners necessitates an assessment of the
requirement of the investment legislation of Nigeria. As there have been calls for the Nigeria
government to reciprocate the actions of Ghana. Additionally, since Nigerians are the most
affected group due to their high numbers in Ghana it enriches the research to access the
investment legislation of Nigeria, especially the legislation that pertains to the involvement of
foreigners.
3.8 The Framework of the Nigerian Investment Promotion Commission Act
The earlier use of restrictive legislation in Nigeria has been highlighted elsewhere.39
The
prevailing investment legislation is the Nigerian Investment Promotion Centre (NIPC) Act
16, Chapter N117 (Decree No. 16) of 1995. The statutory agency established by the Act is the
NIPC. The agency is charged with providing an investment climate that is conducive for
investment in order to attract investors into the country.40
Article 17 of the NIPC Act, provides grounds for foreigners who want invest in Nigeria. It
provides that foreigners are permitted to participate in the operation of any enterprise in
Nigeria except the activities named in the “negative list”. Article 31 of the Act provides the
definition of the negative list which includes: the production of arms, ammunition narcotic
and psychotropic drugs, manufacture of military and para-military paraphernalia of the
Nigerian Immigration, Prisons, Police Force, and Customs and other items that the Council
may at the necessary time determine. It adds that both Nigerians and non-Nigerians are
disallowed from engaging in the production of products outlined in the list.41
An analysis of
the NIPC Act shows that Act allows for foreign participation without requiring minimum
investment thresholds. The knowledge by the Nigerian traders that fellow community citizens
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are not required to meet any investment criteria, led them to seek redress from the ECOWAS
Community Court of Justice.
3.9 The ECOWAS Community Court of Justice
The mechanism for the resolution of conflicts within the sub-region is placed in the mandate
of the ECOWAS Community Court of Justice. ECOWAS formally had a Tribunal; this was
later revised, and enshrined in the Revised ECOWAS Treaty.42
It serves as an avenue for
community citizens to address issues that pertain to acts by governments that impede their
rights as community citizens. Furthermore, it also serves, as a medium through which disputes
that arises between member states is adequately resolved. The court also grants access to
individuals for any acts that violate their rights. The court however, refuses to grant
anonymity to plaintiffs who initiate a court action. For this reason, it requires the provision of
the names of the intended respondents. The court in the delegation of its functions also has the
mandate to adjudicate on disputes that arise from the interpretation of any of the Protocols of
ECOWAS.43
The Nigerian traders who were affected by the enforcement of the GIPC Act 478, sought
redress by taking the matter to the ECOWAS Community Court of Justice. The traders led by
the National Union of Traders Association of Ghana (NUTAG) and National Association of
Nigerian Traders (NANTS), petitioned the court that the enforcement of the GIPC Act was in
contravention of the ECOWAS Trade Liberalization Scheme (ETLS). The scheme they
argued conferred on them the same right as Ghanaian nationals. They therefore prayed the
court to prevent the Ghanaian government from enforcing the Act and making it conform to
the ETLS. Named as the respondent to the case brought before the court were: the Justice and
Attorney Generals Departments, the Ministry of Foreign Affairs and Regional Integration and
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the Ministry of Trade and Industry. The Attorney General in response to the writ prayed the
court to dismiss the petition.44
The ECOWAS Court of Justice dismissed the case brought by the Nigerian citizens involved
in retail trade in Ghana. It rejected the arguments by the plaintiffs that provisions of the GIPC
Act that prohibited foreign engagement in retail trade and trading in areas designated as
markets were in contravention of the ECOWAS Protocol on the free movement of persons
and their right of establishment.45
The decision of the Court is final and binding on all parties.
The likely implication of the court’s decision is that Ghana could embark on the
implementation of the GIPC Act 865, 2013. If this is the case, what effect would that have on
the Ghana-Nigeria relations?
3.10 Whither Hence?
Since the enforcement of the GIPC Act in 2012, the Nigerian government has made overtures
to their Ghanaian counterparts. This has seen both countries organizing meetings at the
ministerial level to seek an amicable solution. Additionally, the affected Nigerian traders, led
by the President of the Nigerian Trade Union in Ghana, Deacon John Igwe Ukala have
impressed on their government to review the list of Ghanaian goods banned in 2006, as they
believe that it was that action that has resulted in the GIPC Act 478 being enforced. In
response to this call, the Nigerian government has agreed to review the prohibited list in order
to allow into Nigeria, Ghanaian goods that meet the ECOWAS rules of origin criteria.46
This
is indeed a step in the right direction. If the Ghanaian government, however, decides to
enforce the GIPC Act, its actions would be undertaken with the knowledge that the ECOWAS
Community Court of Justice dismissed the case brought by the Nigerian traders and also with
support from the investment laws of Ghana.
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Chapter III of the Supplementary Protocol on the Free Movement of Persons, Right of
Residence and Establishment, signed in 1990, provides measures that can be taken when
discriminatory measures have been put in place by a member states against the nationals of
another member state. Article 4(1) the Protocol prescribes that, member states shall accord
non-discriminatory treatment to nationals of other member states. Failure to observe the
aforementioned, in a specific activity, allows for the member state whose nationals are being
discriminated against, to accord discriminatory treatment to nationals from the other member
state. The provision of the Protocol shows that Ghana actions, if undertaken, and if met by
similar actions by Nigeria could be deemed legal.
Since 2006, the trade war between Ghana and Nigeria has increased. This has caused a
considerable amount of trade earnings between both countries to be lost. A World Bank (WB)
report shows that there are billions of dollars in lost revenues between African countries every
year. In the report, the authors note that:
While uncertainty surrounds the global economy and stagnation is likely to continue in
traditional markets in Europe and North America, enormous opportunities for cross-
border trade within Africa in food products, basic manufactures and services remain
unexploited.47
The report shows that both countries, and by extension the whole of Africa have a
considerable assurance of benefits that cooperation can bring them than what they can achieve
as singletons. There are adequate benefits to be garnered by both countries if they pull their
resources together and pursue and enforce the various agreements that they have ratified
within ECOWAS, especially the ETLS.
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3.11 Will the Trade War between Ghana and Nigeria Descend into Xenophobia?
Since 2013, the Ghanaian government has taken steps to coordinate the activities of the
affected Nigerian traders. The traders have been advised to register their businesses, pay their
taxes and make their stay in Ghana legal within the framework of the ECOWAS Protocol.
Some Ghanaian traders, however, have met this with disapproval. In June 2014, the Ghana
Union of Traders Association (GUTA) locked down their shops and embarked on a four-day
strike citing unfair and unjust trade policies that were being undertaken by their government.
The group complained inter alia, that the 3% levy placed on foreign imports, the increase in
the amount of Value Added Tax, the depreciation of the Ghanaian Cedi and the activities of
foreigners, who were still involved in retail trade was causing enormous strain on their
businesses.48
Though the activities of the foreign traders is alluded to, the other reasons for the
strike if addressed, would improve their businesses.
In July 2014, Suame Magazine, in Kumasi, the nexus of spare parts business in Ghana,
Ghanaian traders locked the shops of Nigerian traders, adding that their activities were in
contravention of the GIPC Act. They added that the action was taken due to the failure of the
Ghanaian government to enforce the GIPC Act. Personnel of the Ghanaian Police reopened
the Nigerian shops a few days later.49
Jimam Lar in his article Free Movement, Migration and
Xenophobia: A call for more attention, posits that the failure of governments and downturns
in the economy have led to immigrants being singled out as the cause of economic problems.
While he presents many cases within the sub-region, he argues that the promulgation of the
Aliens Compliance Order in Ghana in 1969 and Nigeria’s expulsions of Ghanaians from that
country are the most standout examples.50
Though Ghana-Nigeria relations have been met by a plethora of difficulties, the strength of
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the diplomatic relations that exists between both countries would avert the complete
severance of diplomatic ties. During the Nkrumah years, when both countries found
themselves on opposing ideological groups in the pursuit of African unity, severance was
hinted at, but never carried out.51
The Aliens Compliance Order and the expulsions of
Ghanaians from Nigeria from 1983-1985 also added considerable strain on their relations.
Though there has been an increase in the spates of trade disputes between both countries,
they have considerable stake in their bilateral trade relations that would make them pursue
the achievement of a more amicable solution. The study gives a summary of findings,
conclusion and proffers recommendations in the subsequent chapter.
3.12 Conclusion
In conclusion, the use of restrictive legislation in Africa was born out of the situation that
most African countries found their economies in at independence. In Ghana, apart from the
Nkrumah government, the two subsequent governments after 1966 pursued a truly
Ghanaianization agenda. For example, the NLC and the PP governments between them
enacted the Ghanaian Enterprises Decree, the Aliens Compliance Order and the Ghana
Business (Promotion) Acts. In later years, due to Ghana’s membership of ECOWAS, there
have been calls by member states and community citizens from member countries that
identical rights should be accorded them as prescribed by the ETLS.
The trade war between Ghana and Nigeria has been examined with emphasis being placed on
the enforcement of the GIPC Act 478 and the implications of that action. The chapter
concludes that, though the enforcement of the GIPC Act 478 had negative effects on their
relations, the buoyancy of their relations and the history that permeates it, would see them
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strive to put away their differences and forge a truly cordial relations, that would see them
work within the framework of the ETLS.
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ENDNOTES
1 Ofusu-Amaah, W. P. in his article, Restriction of aliens in business in Ghana and Kenya. The International
Lawyer, Vol. 8, No. 3 (July), draws from legal cases from France, Britain and the US, especially from p. 464-
477. 2 Ibid p. 460.
3 Ibid p. 452.
4 Killick, Tony. (2010). Development Economics in Action: A Study of Economic Policies in Ghana, New York:
Routledge, p. 41. 5 Jimam, T. L. (2008). Free movement, migration and xenophobia in ECOWAS: A call for more attention in
Perspectives on West Africa’s Future, p. 25. 6 Ofusu-Amaah op. cit. p. 458.
7 Bauer, P.T (1954). West African Trade: A study of competition, oligopoly and monopoly in a changing
economy. Cambridge. Quoted in Ofosu-Amaah, W. P. (1974). Restriction of aliens in business in Ghana and
Kenya. The International Lawyer, Vol. 8, No. 3 (July), p. 458. 8 Obed Asamoah names this as one of the main foreign policy pursued by Nkrumah. Quoted in Asante, K. B.
(1997). Foreign policy making in Ghana: Options for the 21st century. Accra: Gold-Type Ltd, p. 45.
9 Killick op. cit. p. 342.
10 Ibid p. 41.
11 Ibid.
12 Ibid.
13 Ibid p. 341.
14 Ibid p. 61.
15 Ibid p. 341.
16 Ibid p. 342.
17 Ibid.
18 Macdonald, G. P. (1972). Recent legislation in Nigeria and Ghana affecting foreign private direct investment.
The International Lawyer, Vol. 6, No. 3 (July), p. 553. 19
Killick, op. cit. p. 63. 20
Ofosu- Amaah, op. cit. 456. 21
The exchange rate for one Cedi= $.78, see Ofosu-Amaah, p. 460. 22
Ibid p. 460 23
Killick op. cit. p. 342. 24
Asante op. cit. p. 45. 25
Retrieved July 14, 2014 from http://www.gipcghana.com/about.html 26
These provisions are outlined in Articles 18 and 19 of the GIPC Act 478, 1994. 27
Retrieved June 4, 2014 from http://ynaija.com/ghana-closes-down-shops-of-illegal-foreign-traders-nigerian-
businessmen-protest/ 28
Retrieved July 15, 2014 from http://www.africanmanager.com/site_eng/detail_article.php?art_id=19062. 29
Retrieved July 8, 2014 from http://www.imanighana.com/2012/07/imani-the-anti-ecowas-foreigner-trading-
policy-is-incoherent/. 30
For a full appraisal of the role of Think-Tanks, see Ohemeng, F. L. K. (2005). Getting the state right: Think
Tanks and the dissemination of new public management ideas in Ghana. The Journal of Modern African
Studies, Vol. 43, No. 3 (September), p. 443-465. 31
Ghana Nigerian Traders face deportation.mpg NTA 24. Retrieved from
https://www.youtube.com/watch?v=qo1JgLtvA4M. 32
Nigeria traders cry foul. Retrieved July 5, 2012 from