The Struggle for Local Retail in Ghana: A Tale of Foreign Competition and Legal Challenges
At the bustling Suame Magazine Market in Kumasi, Ghana, the vibrant energy of young traders reflects the daily struggle to make ends meet. Most of these traders deal in automotive spare parts, mechanical services, and related retail activities. However, a growing concern among local operators is the increasing presence of Nigerian traders in this market, which was originally intended to be the preserve of Ghanaians.
According to the Ghana Investment Promotion Centre (GIPC) Act 865, Section 27a, only citizens or enterprises wholly owned by citizens are allowed to engage in retail trade. This law aims to protect local businesses from foreign competition. However, several local operators have reported that Nigerian traders have increasingly taken over the retail space in the market.
Prince Sarfo, a mechanic at the Asawase Renault shop, has worked at the shop for over 20 years. He explained that he often buys spare parts from a nearby Nigerian-owned shop because they consistently have what he needs. However, he has never received a proper VAT receipt from the trader. This practice is widespread, with many traders reporting similar experiences.
Ashanti Regional Chairman of the Ghana Union of Traders Association (GUTA), Anthony Oppong, highlighted the challenges faced by local traders. He pointed out that local goods are more expensive due to the numerous taxes they pay, while many foreign traders do not pay any form of taxes. They hide behind the ECOWAS treaty and bring in goods without paying taxes, making it difficult for local traders to compete.
Both GUTA and Mr. Sarfo allege that some foreign traders use unapproved routes to bring in goods, especially those who have not registered with the GIPC. These traders often do not have a definite address for easy tracing, employing locals to sell their goods. They have warehouses somewhere in town, come to the markets with their complimentary cards, and give them to unsuspecting people. Later, they supply goods on the blind side of city authorities, evading taxes, especially income tax and PAYE.
Mr. Sarfo also claimed that most foreign traders do not issue proper receipts and their activities could facilitate illicit financial flows. “They change their money into Naira and send it back to their country after making sales. They do not save in local banks. They send the money through their counterparts,” he alleged.
Mr. Oppong warned that beyond the significant losses in taxes and national revenue, Ghana risks having its trading activities dominated by foreign entities in the coming years. This development is described as dangerous, a potential national security threat, and a setback to employment opportunities for the country’s growing youth population.
This situation led GUTA to raise serious concerns and close down several shops belonging to Nigerian and other African nationals, creating tension in markets like Abossey Okai Market in Accra.
In response to these escalating tensions, Seyiram Fiakeye, Director of Events and Programmes at Afrocentric Network, called for a full audit and review of the GIPC Act 865. Afrocentric Network advocates for the freedom of Africans to trade and work freely across the continent. Mr. Fiakeye argued that the Act disproportionately favours elite investors while restricting ordinary African traders. He questioned why lawmakers crafted laws like the GIPC Act 865 that protect no one but elite investors. “How many ordinary citizens can raise US$1 million or employ 20 skilled workers to sell phone accessories or clothes?” he asked.
He cautioned that Africa cannot afford internal conflict when facing global economic pressure. “While other continents build global empires, we are busy fighting over stalls in Kasoa,” he said. He called for an immediate end to targeted actions against Nigerian and other African traders, equal enforcement of trade laws, a full audit and public-centred review of the GIPC Act 865, and a nationwide campaign to promote African unity, economic cooperation, and cultural pride.
The debate over foreign participation in retail trade at Suame Magazine highlights tensions between enforcement of existing statutes, the realities of cross-border commerce under ECOWAS, and concerns about tax compliance and illicit financial flows. Traders, unions, and civil society groups say the situation requires urgent, transparent action to ensure fairness for local businesses while protecting legitimate pan-African trade.
According to a news publication on Ghanaweb.com, the country loses more than $9 billion to corruption, tax evasion, and smuggling, which are all enablers of illicit financial flows (IFFs). More often than not, tax evasion comes about when individuals and business owners either underdeclare goods and services or, most importantly, do not have their business registered with the appropriate quarters. This makes it difficult for law enforcement agencies to track them easily for identification and collection of what is due the state.
GIPC 2024 Investment Report
In GIPC’s 2024 investment report, a total of 140 projects were registered by the GIPC, marking an 11.48% increase compared to 2023. However, the FDI value decreased by 5% from $649.58 million in 2023 to $617.61 million in 2024. At the end of the fourth quarter of 2024, 140 projects were registered by GIPC with a total estimated investment cost of $651.72 million. This comprised a FDI component of $617.61 million and a local component of $34.11 million. Total initial transfers amounted to $31.25 million.
Of the 140 projects registered, 107 were wholly foreign-owned, representing 76.43% of the projects with a total estimated investment cost of $341.65 million. The Joint Venture projects between Ghanaians and their foreign counterparts were 33, representing 23.57% of the projects and with a total estimated investment cost of $310.07 million. Of the total, general trade had 15.
A total of 15,328 jobs are expected to be generated from the 140 projects registered in 2024, with operations at full capacity. 13,733—representing 89.59% of the total jobs—will be for Ghanaians, and the remaining 1,595 representing 10.41% will be for non-Ghanaians. Only 10 projects were in Ashanti Region. Nigerians had five of the registered projects.
Renewal of GIPC Registration: From January to December 2024, 694 companies renewed their registration with the Centre. Under the GIPC Act 865, companies are required to renew their certificates every two years. Of the 694 companies that renewed their registrations, 455 were wholly foreign companies, 165 were Joint Venture companies involving Ghanaians, and 74 were wholly Ghanaian companies.
Consequently, if the GIPC Act 865 continues to be poorly enforced, the country risks losing billions of cedis—despite significant contributions made by the few companies that consistently register and renew their permits as required.
This story received support from Oxfam in Ghana, through the Norwegian Agency for Development Cooperation. Any financial assistance or support provided to the journalist has no editorial influence.
Provided by SyndiGate Media Inc. (Syndigate.info).
