Africa, Asia-Pacific, Development & Aid, Economy & Trade, Headlines, Poverty & SDGs, Trade & Investment, Trade and poverty: Facts beyond theory

GHANA: ‘‘You Have to Speak Up When Competition Destroys You’’

Francis Kokutse

ACCRA, Jul 31 2008 (IPS) - Business has been slow for many Ghanaian traders. They blame the situation on not only the influx of cheap Chinese products but also insufficient legal protection and corruption.

Accra's bustling central business district Credit:  Francis Kokutse/IPS

Accra's bustling central business district Credit: Francis Kokutse/IPS

The concern about the Chinese expansion in business circles was illustrated with the convening of a roundtable discussion in November last year which looked at ways to protect small industries against the intrusion of Chinese products.

But views on the issue are varied. Some see it as an opportunity while others think it is destructive to the economy.

IPS visited the central business district of the capital Accra to hear from local traders what they are talking about when they say Chinese goods are killing their businesses.

Philip Asobonteng (45) has operated a shop in Accra for more than 20 years. He told IPS, ‘‘we have no problem with competition but, if it is coming to destroy you, there is a need to speak up’’.

Last year traders closed their shops to protest against what they regard as unfair competition. However, this elicited no response from the government. After all, the Chinese traders are not breaking any law.


The country’s investment code stipulates that any foreigner investing a minimum of 300,000 dollars can open a retail business. In addition to that, the business should employ 10 Ghanaians.

Any foreigner who meets these requirements can legally start her or his own business. But, Asobonteng says, ‘‘they are using the laws to create hurdles for us and we want the government to take a stand’’.

The Ghana Union of Traders (GUTA) sent a proposal to parliament in November last year urging members of parliament to review the investment code. They claimed that the code had not been reviewed since being enacted 13 years ago.

According to GUTA, the minimum investment amount should be raised to one million dollars and the number of Ghanaians to be employed increased to 25. In addition, the commodity categories should also be reviewed. GUTA executive member Joseph Addy claimed that foreigners, including Chinese, were abusing the law.

The Association of Ghana Industries (AGI) has insisted that a partnership with China should be a win-win situation: ‘‘We need a measured approach to protect our interests in the trade relationship with China and other developed countries.’’ This concurs with the majority of traders’ views sampled by IPS.

William Afflu, a seller of household products, told IPS, ‘‘these Chinese are using tricks to get around the law. They break the law in a very clever way and no one can take them to task.’’

Addy had told the roundtable conference last year that some foreign traders registered as free-zone companies but then imported goods to sell on the Ghanaian market. Free-zone companies are given government incentives to manufacture and process goods inside Ghana.

Other foreigners use the pretext of exporting goods to neighbouring landlocked countries to divert goods to the Ghanaian market without paying the necessary taxes, which makes these goods cheaper.

In order to fight off the threats posed to local commercial interests, the Ghana Investment Promotion Centre (GIPC), together with the customs and excise services, immigration services and the police, set up a task force last year to arrest those foreign traders who were abusing the law.

Unfortunately this intervention has not been sustained. One reason is the collaboration of some Ghanaians with foreign traders to flout the law. Afflu alleged in an interview with IPS that he knew Ghanaians who had approached foreigners, especially Chinese, to ‘‘front’’ for them to avoid them having to meet the criteria for foreign businesspeople.

‘‘These are things you see, you know what has gone on but the paperwork tells a different story. In the event of this happening, what can you do?’’ asked Afflu rhetorically.

This development poses a difficult problem. How can business partnerships between Chinese and Ghanaians be checked? Meanwhile the government’s trade with China is on the increase.

Joseph Henry Mensah, a senior cabinet minister and chairperson of the National Development Planning Commission, does not regard China’s increasing presence in Ghana as a threat to the country. Rather, he sees it as providing trade opportunities which the country should take advantage of for the benefit of all.

‘‘We are all spending time to fight a threat from China when actually there is none,’’ Mensah argued.

 
Republish | | Print |