THE ECOWAS TRADE LIBERALIZATION SCHEME AND THE …€¦ · have on Ghana-Nigeria relations is also...

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.ghUniversity of Ghana http://ugspace.ug.edu.gh

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……………………..


ii

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.


iii

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.


iv

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


v

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

1.6 Theoretical Framework…………………………………………………………..7

1.7 Literature Review……………………………………………………………….11

1.8 Sources of Data…………………………………………………………………15

1.9 Arrangement of Chapters……………………………………………………….16

Endnotes……………………………………………………………………………...17


vi

CHAPTER TWO

OVERVIEW OF THE ECOWAS TRADE LIBERALIZATION SCHEME

2.0 Introduction…………………………………………………………………….19

2.1 Establishment of the Economic Community of West African Sates…………..19

2.2 Stages of Integration……………………………………………………………22

2.3 The ECOWAS Trade Liberalization (ETLS)…………………………………..23

2.4 The ECOWAS Protocol on the Free Movement of Persons…………………...24

2.5 The Protocol Relating to the Free Movement of Persons, Residence and Establishment:

Phase One…………………………………………………………………………….25

2.6 Challenges with the First Phase, the Right of Entry…………………………...26

2.7 Implementation of the Second Phase…………………………………………..29

2.8 Implementation of the Third Phase…………………………………………….30

2.9 Challenges to the Implementation of the ETLS………………………………...30

2.10 Ghana-Nigeria Trade War……………………………………………………...32

2.11 Ghana-Nigeria Trade Relations from 2000-2012: An Era of Increased Cooperation and

the Birth of a “Trade War”……………………………………………………………32

2.12 Conclusion……………………………………………………………………...36

Endnotes………………………………………………………………………………37

CHAPTER THREE

HISTORY OF GHANA’S USE OF RESTRICTIVE LEGISLATION

AND THE ENFORCEMENT OF THE GIPC ACT 478 3.0 Introduction……………………………………………………………………...39

3.1 History of Ghana’s Use of Restrictive Legislation……………………………...39

3.2 The Use of Restrictive Legislation in the Nkrumah Years………………………42


vii

3.3 The Use of Restrictive Legislation During the National Liberation Council

Administration…………………………………………………………………………43

3.4 The Use of Restrictive Legislation During the Busia Administration……………43

3.4.1 Promulgation of the Aliens Compliance Order …………………………………44

3.4.2 Ghana Business (Promotion) Act 1970 …………………………………………44

3.5 The Framework of the GIPC Act………………………………………………...46

3.6 The Enforcement of the GIPC Act, 478 in 2012…………………………………47

3.7 The Revised GIPC Act, 865, 2013……………………………………………….49

3.8 The Framework of the Nigerian Investment Promotion Commission Act……….51

3.9 The ECOWAS Community Court of Justice……………………………………..52

3.10 Wither Hence?........................................................................................................53

3.11 Will the Trade War between Ghana and Nigeria Descend into Xenophobia?.......55

3.12 Conclusion………………………………………………………………………..56

Endnotes……………………………………………………………………………….58

CHAPTER FOUR

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

4.0 Introduction………………………………………………………………………60

4.1 Summary of Findings…………………………………………………………….60

4.2 Conclusions………………………………………………………………………62

4.3 Recommendations………………………………………………………………..63

Bibliography………………………………………………………………………….66


viii

ABSTRACT

There has been a trade war in Ghana-Nigeria trade relations since 2006, when Nigeria

prohibited the importation of a number of products from Ghana. Since then, both countries

have put in place systemic measures that pose challenges to the activities of citizens and

companies doing business in the other country. These impediments are directed principally

at the movement of goods, services, and other players such as movie actors, film producers

and businessmen. The study examines the ECOWAS Trade Liberalization Scheme (ETLS),

which is the framework that governs trade and migration among the member states of

ECOWAS. The study also examines the Ghana Investment Promotion Act (GIPC) Act 478

and the effects of its enforcement in 2012. After the enforcement of the Act, Nigerian traders

affected by the measure taken by Ghana sought redress from the ECOWAS Community

Court of Justice. The ECOWAS Community Court of Justice dismissed the case, adding that,

the GIPC Act does not contravene the ETLS. The effect that the decision of the court would

have on Ghana-Nigeria relations is also examined. The study concludes that while the

enforcement of the GIPC Act would have detrimental effects on Ghana-Nigeria trade

relations, if both countries put in place the requisite mechanisms, and operate within the

framework of the ETLS, the trade war between them can be overcome.


1

CHAPTER ONE

THE RESEARCH DESIGN

1.0 Background of the Study

Relations between Ghana and Nigeria have been vitiated by disagreements. Relations,

though not a creation of independence as both countries were under the same colonial

umbrella of British West Africa, is replete with various episodes of disagreements, both

have at a time expelled the nationals of the other for political convenience and economic

prudence. Overt mistrust, competition and intermittent patches of high cordiality have

permeated Ghana-Nigeria relations. The relations, first a creation of the regular interactions

between them as British colonies and so congealed in the ambits of colonialism was later

streamlined with the attainment of independence, first by Ghana in 1957 and then Nigeria in

1960.

In the past fifty years, relations between both countries have oscillated between cooperation

and disagreement. The oscillatory nature of the relations was not as animus, when it came to

the treatment of the nationals of either country, they were treated fairly and were allowed to

burgeon. This pertained until the administration of Prime Minister K. A. Busia of Ghana in

1969, promulgated the Aliens Compliance Order. “The Order gave all aliens without

residence permits two weeks either to obtain a residence permit or leave”.1 This expulsion

was novel as the movement of people throughout West Africa is an ancient phenomenon,

predating both the borders of modern West African states, their customs and immigration

regulations. Although the Aliens Compliance Order affected nationals from all the countries

that border Ghana, Nigerians were the most affected.2


2

The formation of the Economic Community of West African States (ECOWAS) on May 28,

1975 signalled a collective response by the member states to the economic problems that

beset them. Fifteen Heads of State and plenipotentiaries established ECOWAS. These

countries realized that their dependence, economic problems and the failure of their efforts as

individual countries could only be remedied by the creation of a collective front. This

collective front could help mitigate the poverty and underdevelopment that they were in.3

Ghana and Nigeria were founding members of this regional economic community.

The formation of ECOWAS saw both countries increasingly interacting outside their

traditional bilateral relations. There were renewed hopes that the problems that had beset their

relations would be subsumed in their collective drive to improve their economic conditions. In

the mid 1970’s to early 1980’s, the Nigerian economy was enjoying the benefits of an

increase in the price of crude oil, a commodity that Nigeria exported. The sizeable capital

inflow led the government to spend considerable amounts of the oil revenue on the country’s

infrastructural development. The inability of the country to meet the labour demands of this

policy saw an influx of immigrants from across the sub-region. This led to a considerable

number of Ghanaians immigrating to Nigeria in search of better economic opportunities. The

incident that created considerable discontent in their relations occurred in 1983, when

President Shehu Shagari of Nigeria ordered that foreigners without residence permits leave

Nigeria in two weeks. This decision was taken because at the time, the country’s economy

was suffering a downturn.4

Like Ghana, in 1969 with the Aliens Compliance Order, the expulsion of Ghanaians was to

garner political points and create a scapegoat for the economic situation that that country was

in. As earlier pointed out, Ghanaians had travelled to Nigeria attracted by that country’s


3

burgeoning economy. An added advantage to the Ghanaian immigrants was the benefit that

ECOWAS Protocol on the free movement of persons inured them. The Protocol meant that as

community citizens, they had the right of entry into any member state for up to ninety days.

Their expulsion was the second major act of that kind between both countries.5 It is observed

that the expulsions, first from Ghana, then from Nigeria had disturbed the informal balance of

relations among states whose populations had entertained and hosted traders and travellers for

centuries.6

In the beginning of the 21st century, both countries had returned to democracy after lengthy

military rule. Ghana was under the leadership of President John A. Kuffour, Nigeria under a

democratic President Olusegun Obasanjo. There existed a kindred spirit between both

presidents, which reflected in their relations. It was indeed, the best of times in their relations.

In 2006, however, Nigeria imposed restrictions on the importation of forty products; thirty-

three of which were from Ghana.7 The Ghanaian government registered its displeasure,

indicating that the ban was in contravention of the ECOWAS Trade Liberalisation Scheme

(ETLS), which allows for the free movement of goods among member states. The ban on

Ghanaian products put considerable strain on their trade relations. Since 2006, there has been

an increase in the incidence of trade disputes between both countries. There have also been

claims and counter claims by both countries that impediments to business were being put

against their citizens.

In 2012, the Ghana Investment Promotion Centre (GIPC) issued an ultimatum barring

foreigners to engage in retail trade. The centre placed emphasis on the Central Business

Districts (CBD) in Accra and Kumasi, especially areas designated as markets. The GIPC

announced that the activities of foreigners involved in the retail trade contravened GIPC Act


4

478, 1994. The GIPC Act 478, Article 18 notes that trading in the small-sectors is the

exclusive preserve of Ghanaians and so bars foreign participation. This action affected a

number of Nigerians.

1.1 Statement of Research Problem

Literature on Ghana-Nigeria trade relations within the ETLS provides explanation for the

birth of the trade war between both countries, as much of that literature pointed to the

likelihood, in the future, of member states resorting to cost-benefit analysis as signatories to

the ETLS. Okolo asserts that African governments have shown reluctance to sacrifice full

economic benefits for regional integration. He adds that governments discriminate against

non-nationals in the small-scale sector in order to protect the interest of indigenous

entrepreneurs. The literature also provides that in Ghana, community citizens were barred

from taking part in the retail trade under Flt. Lt. Jerry Rawlings. In Nigeria, there were also

criticisms by citizens against their government’s commitment to ECOWAS to the detriment

of the home base.8

He adds that, “other nationalist sentiments may begin to echo as West African states calculate

the gains and loses from ECOWAS”.9 The expulsion of Ghanaians from Nigeria in the 1980’s

was as a result of the burdens of its membership to ECOWAS outweighing the benefits. Since

leaders of the ECOWAS member states want expeditious industrialization and economic

growth, it “becomes a matter of national interest, and involves the continuation of domestic

political support, not to allow considerations of regional cooperation to undermine national

goals”.10


5

Mytelka’s assertion that the dire economic condition that leaders find their economies in

makes them resort to seeking rapid and drastic benefits from integration, reiterates this

notion.11

Susan Strange, John Zysman, and Stephen Cohen add that the practices of states,

like industrial targeting and the putting up of selective safeguards have weakened the cardinal

premises of the trade regime.12

Trade regime is usually put in place to ensure predictability in

the actions of states.

In 2006, Nigeria unilateral banned the importation of thirty-three products from Ghana even

though Nigeria is a signatory to the ECOWAS Trade Liberalization Scheme. This action

shows the pressures that governments are under to prioritize domestic crisis management and

put in place protective measures against countries and individuals, especially the regulation of

sensitive sectors.13

The ban placed on Ghanaian goods by Nigeria saw the birth of a trade war

between both countries. Since then, there has been an increase in the incidence of trade

disputes between both countries.

In 2012, the Ghanaian government enforced the GIPC Act 478, 1994. It appears that the

enforcement of the GIPC Act does not provide concessionary grounds for Nigerian traders;

this affected the nature of Ghana-Nigeria trade relations. The Act requires that foreign

investors, including community citizens, meet stipulated investment thresholds before they

can venture into certain sectors of the Ghanaian economy.14

The study seeks to ascertain if the

enforcement of the Act would allow for the smooth implementation of the ETLS in Ghana-

Nigeria trade relations, as well as ascertain the effects that the enforcement of the GIPC Act

478 in 2012 would have on the right of establishment of community citizens.


6

1.2 Objectives of the Study

a) The study examines the ECOWAS Trade Liberalization Scheme and the nature of

Ghana-Nigeria Trade Relations from 2000-2012.

b) To highlight the recent manifestation of Ghana-Nigeria trade dispute, that is, the

promulgation of the GIPC Act 478, 1994 in 2012.

c) To examine the effects that the decision of the ECOWAS Community Court of Justice

would have on Ghana-Nigeria trade relations and on Nigerian traders in Ghana.

d) To offer recommendations for the resolution of the trade war between both countries.

1.3 Significance of the Research

The research examines the contemporary manifestation of Ghana-Nigeria trade war that has

been amplified by the enforcement of the GIPC Act 478, 1994 in 2012. It also traces the

history of discord and cooperation that has been a feature of their relations since 2006. It

shifts the level of analysis that has hitherto been focused on the gains and losses at the macro

level to also the micro level, the level of community citizens.

The study also examines the ETLS, from which the Protocol on the free movement of

persons, goods and services draws. It also amplifies Article 59 of the ECOWAS Treaty, which

grants community citizens the right of entry, residence and establishment in member states.

Additionally, it seeks to ascertain the effects the ECOWAS Community Court of Justice

decision would have on Ghana-Nigeria trade relations, while also serving as an improvement

on the body of literature on their trade relations.


7

1.4 Hypothesis

The Promulgation of the GIPC Act 478, 1994 by Ghana and the subsequent ruling by the

ECOWAS Community Court of Justice that the Act does not contravene the ECOWAS Trade

Liberalization Scheme, will have negative effects on Ghana-Nigeria bilateral trade relations

and on community citizens.

1.5 Rationale of the Study

The enforcement of the GIPC Act that signalled an amplification of the trade war between

Ghana and Nigeria is reminiscent of the promulgation of the Aliens Compliance Order that

saw the expulsion of Nigerians living in Ghana, and the expulsions of Ghanaians living in

Nigeria, years later. A study of the enforcement of the Act would provide a clearer

perspective on the direction that their relations would take and the effects that direction would

have on their bilateral trade relations. Additionally, it examines what effects the enforcement

of the Act would have on community citizens. It also presents the benefits that community

citizens’ participation would add in the pursuit of a stronger regional integration agenda.

1.6 Theoretical Framework

This study is situated within Regime Theory and Liberal Institutionalism. The term regime,

which has its roots in domestic politics, refers to the existence of a government or

constitutional order, which could be military, democratic, authoritarian etc. The term regime

when used in international relations, however, which lacks the presence of a central authority,

means; rules that are voluntarily established by states to provide order in their international

relations.15

One of the most influential definitions of regimes was given by Stephen Krasner,

he defines regime as “sets of implicit and explicit principles, norms, rules and decision

making procedures around which actors expectations converge in a given area of international


8

relations.”16

The presence of the components of Krasner’s definition, that is, implicit and

explicit principles, norms and decision making procedures does not necessarily mean that an

entity is an international organisation, although, these components are usually associated with

them.17

The literature on regime is focused on questions such as: How and why are international

regimes formed? What are the reasons for rule-based cooperation? How do regimes influence

the behaviour of states and the collective action within specific issue area? How and why do

regimes evolve and dissolve? There are different schools of thought that proffer answers to

the questions raised.18

The power-based theorists emphasize the role that anarchy and capabilities play in the

distribution of benefits. The realist using hegemonic stability hold that, regimes are

established and maintained by states that hold a “preponderance to power resources”,19

like

US after WWII. They add that if there is a decline in hegemonic power, the regime must adapt

or decline.20

Social constructivists on the other hand, are critical of both the realist theory of hegemonic

stability, and neoliberal institutionalism. They argue that state’s interest is created, not given.

Constructivists add that, states redefine their interest without a comprehensive change in the

distribution of power and institutions and regimes are used to “lock in” 21

their advantage.

They add that self-interest of states alone does not explain the maintenance of regimes, adding

that regimes serve more than regulative functions; they regulate the behaviour of states to

certain norms and rules. Additionally, in international politics, actors come to decisions based

on social construct and identities. Drawing from rule-governed cooperation, actors change


9

their views on who they are and how they relate to other actors. Collaboration and

cooperation therefore becomes a habit.22

In the 1980’s, Robert Keohane propounded one of the most widely referred to approach to the

study of regime theory. For him, the term “regime theory” lacks the scope to adequately

express the conditions necessary for the achievement of international cooperation. He

therefore, developed the broader concept of “institutions”, a concept that he defines as,

“persistent and connected sets of rules (formal and informal) that prescribe behavioural roles,

constrain activity, and shape expectations.”23

Drawing from Keohane’s definition, international institutions can take either of three forms.

First, Formal Intergovernmental, Cross-National or Nongovernmental Organizations, these

are entities that are created with a clearly defined purpose, rules and missions. For example,

the United Nations (UN). Secondly, International Regime, these are institutionalized rules

explicitly agreed upon by governments that address a distinctively agreed upon sets of issues.

Examples include the Law of the Sea regime, the various arms control agreements that were

signed between the US and the Soviet Union during the Cold War: Strategic Arms Limitation

Treaty (SALT) I, II, and the Strategic Arms Reduction Talks (START). Thirdly, Conventions;

these are tacitly implied rules and understanding that govern informal institutions. These

tacitly expressed agreements forms the basis for the understanding and organization of

behaviour. One of the cardinal principles of these conventions is “reciprocity”; this principle

makes political leaders to expect reciprocal treatment in international relations, which may be

positive or negative,24

these are usually in response to prior actions taken by states.

Additionally, it makes an actor not to defect, as defection could mean benefits that would later

create repercussions.


10

Keohane did not restrict his purview of neoliberal institutionalism to just formal organizations

and regimes. The neoliberal institutionalist counter what they see as the intellectual hegemony

of the neorealist in the study of international relations.25

Keohane begins with the premise

that, “variations in the institutionalization of world politics exert significant impacts on the

behaviour of governments. In particular, patterns of cooperation and discord can be

understood only in the context of the institutions that help define the meaning and importance

of state action.”26

Neoliberalist and Neorealist are at variance as to the role that regimes play. Both schools of

thought agree that international relations is bereft of a stable hierarchy due to its anarchic

character. Neoliberals, however, state that this anarchy does not mean war. The neorealist

claim that within this anarchical condition, relative gains are more important than absolute

gains, that states are interested in who gains more. The neorealist assertion is in tune with the

US-Soviet relations during the Cold War. Neoliberalists hold an alternative view, they argue

that the realist position does not adequately explain the assistance given to Europe and Japan

after WWII by the US. Also, within the European Union (EU), although there exists an

uneven distribution of the gains brought by economic integration, yet member states are living

in peace.27

Neoliberals and realists have divergence of opinions on the roles that institutions and regimes

hold for states. Realist see regimes as constrains to state behaviour, neoliberals on the other

hand, consider regimes as enhancing mutual benefits to all states. With the rise of

interdependence and interconnectedness, it is speculated that states will depend on regimes

more for selfish gains.28


11

The ECOWAS Trade Liberalization Scheme (ETLS) fits into what neoliberalist

institutionalist describe as, “institutionalized rules explicitly agreed upon by governments to

deal with a particular set of issues.”29

The Heads of State voluntarily agreed to accede to the

ETLS as the framework for the regulation of trade and the enhancement of the free movement

of persons, capital, goods and services among member states. The framework also contains

what Keohane describes as “patterns of cooperation and discord that, help define the meaning

and importance of state action”,30

the provisions of the Protocol defines if the actions of

member states are in tune with or contravenes the principle, norms or procedures of the ETLS.

The ECOWAS Community Court of Justice is the institution that adjudicates disputes among

member states or the violation of the rights of community citizens that arise from among other

things, failure of member states to implement the ECOWAS Protocol on free movement of

persons. This became a necessity with the implementation of the three complementary phases

of the right of entry, residence and establishment and the need to ensure the free movement of

goods and services across the community, as well as the need for a permanent mechanism to

deals with issues that arose from the interpretation of the ECOWAS Treaty.

1.7 Literature Review

The ECOWAS Trade Liberalization Scheme has been the subject of various researches.

Research on the ETLS helps to ascertain the degree of progress that has been made in the

attainment of the objectives of the ECOWAS free movement of persons and goods. Ahmed

Aghrout points out that formulation and adoption of trade liberalization and free movement of

persons within the community, was pledged by the member states as early as 1977 because

instead of a production-based formula for integration, the Treaty favoured a market-based


12

approach. But due to the prominent position that national interest holds for member states,

there was a dearth of commitment in actualizing its implementation.31

Julius Emeka Okolo in his article Free Movement of Persons in ECOWAS and Nigeria’s

Expulsion of Illegal Aliens,32

examines the effects that Nigeria’s expulsion of community

citizens will have on the free movement of persons in ECOWAS. He asserts that, though in

1983 four member countries of ECOWAS expelled foreigners, the scale of Nigeria’s

expulsion made it standout. He adds that in 1975, in order to effect a Customs Union, the only

provision that directly touches the community citizen was put in place, that is, the principle on

the free movement of persons. The principle was in three phases: the right of entry, residence

and establishment.33

Okolo adds that from 1979, when the first phase was signed, member states of ECOWAS

scheduled fifteen years for the implementation of the three phases of the free movement of

persons. The implementation of the Protocol on the right of entry had in effect, abolished

discrimination due to nationality for all community citizens. In 1983, Nigeria expelled

ECOWAS citizens citing the illegality of their residence and establishment in the country, at

the time, only the first phase that had been ratified by ECOWAS member states.34

Okolo further adds that there is a divergence of opinion on Nigeria’s action. Nigerian officials

on the one hand argue that it was only the Protocol on entry that had been ratified, and so the

expulsion was legally justified and socially expedient. Critics however argue that the issue of

the immigrant’s residence status in Nigeria was only brought up when Nigeria’s economic

buoyancy had subsided. He concludes that the concerns raised by critics on the effects that

Nigeria’s expulsions of community citizens was overstressed, that ECOWAS will weather the


13

storm.35

Time however, has given credence to some of the concerns raised. Today there exists

smaller regional groupings in ECOWAS, an example is the Union Economique et Monétaire

Ouest Africaine (UEMOA) whose formation of a monetary union shook ECOWAS. The

effects that the expulsions had on the ETLS are indelible.

M. Leann Brown in Nigeria and the ECOWAS Protocol on free Movement and Residence,

states that though the Protocol on the free movement of persons is the only provision of the

ECOWAS Treaty that touches the man on the street, it was subject to much debate and

acrimony before and after its signing. Nigerians held reservations about their government’s

participation. While addressing the expulsion of Ghanaians from Nigeria, he adds that though

the expulsions were legal under the ECOWAS Treaty and the domestic immigration laws of

Nigeria, the number of West Africans affected, was a “blatant example of a member states

policy decision contravening the spirit of a regional economic community initiative.”36

In the ECOWAS Protocol on Free Movement of Persons: A Threat to Nigerian Security?

Onwuka conceptualized security as all the factors that aid nation building and posits that the

implementation of the Protocol on free movement of persons was not antithetical to Nigeria’s

security, but served as “the vehicle that will convey and convert the Treaty objectives of free

movement of persons into action.”37

The Protocol gave a legal basis to what had been the

undocumented movement of people into Nigeria. The literature on the influx of community

citizens into Nigeria is disproportionately tilted towards the negative effects of their presence

in Nigeria, for example, the breakdown in the cohesion and strength of labour unions in

Nigeria. According to Onwuka, these immigrants left in their wake from their countries of

origin, a “cascading brain-drain” 38

effect, while contributing to the growth of the Nigerian

economy.


14

Abeeku Essuman-Johnson in his article Immigration to Ghana, asserts that most of the illegal

immigrants from West Africa that enter Ghana come from Nigeria, Mali, Togo and Burkina

Faso. Travelling under the aegis of the Protocol on the free movement of persons and goods,

that allows entry for up to ninety days. He adds that these community citizens do so without

adequate documentation. Essuman-Johnson also provides the GIPC Act 478, 1994 as one of

the legislations that governs investment in Ghana. He adds that the Act “provide incentives

for investment in the country”,39

as foreigners need to invest a minimum of $10,000.40

He adds that the minimum capital requirement, serves as a “draw back for West African

immigrants” that account for the bulk of investors who fail to meet this criteria. Due to their

inability to meet the investment criteria, most of these community citizens engage in

businesses without adequate documentation. He posits that the ETLS complicates matters for

immigration officials as it allows community citizens entry into Ghana for three months

without visas. The Treaty obligation of Ghana means its immigration laws are sidestepped at

entry. But once in Ghana, these community citizens fail to meet both the investment criteria

and immigration laws of Ghana, and continue their residence and establish themselves after

90 days without the required documentation.41

In Free movement, migration and xenophobia in ECOWAS: A call for more attention, Jimam

Lar examines the movement of people within the ECOWAS sub-region and the problems that

beset them. Though ECOWAS gained credibility for the actions it took to manage the

different outbreaks of civil wars in the sub-region, he adds that the sub-regional body

continues “pursuing the original goals of the founding fathers”, that is, the free movement of

goods, services, persons and capital among member countries. It was in pursuance of this that

the Protocol on the Free Movement of Persons, the Right of Residence and the Right of


15

Establishment was signed in 1979. In later years, two Supplementary Protocols on the right of

residence and establishment have been signed in 1986 and 1990 respectively. This step was

taken to bolster intra-ECOWAS trade and also formalize the movement of peoples in West

Africa that predates the arrival of Europeans.42

He adds that over the years, the migration of people across the sub-region has been in

response to a number of factors, political instability, economic, environmental degradation,

educational needs, and social factors among others. As ECOWAS tries to improve the degree

of cooperation within the community, some of these migrants have been affected by

xenophobia, which is a growing trend within the sub-region. He states that the phenomenon is

not predicated on the signing of the ECOWAS Protocol on free movement of persons, as there

had been cases of xenophobia both before and after the signing of the Protocol. He adds that

the fact that there are still cases of xenophobic attacks after the ratification of all three phases

of the protocol signals that “there is some disconnect” in the implementation process.43

The literature on the ECOWAS Protocol on the free movement of persons, goods and services

is considerably skewed towards the hurdles that have plagued the implementation of the

Protocol among member states and Nigeria’s expulsion of community citizens in the early to

mid 1980’s. There is, however, a lacuna in the use of investment legislation in Ghana-Nigeria

trade relations and the effect it would have on the framework of the ETLS. This study makes

a modest contribution in this regard.

1.8 Sources of Data and Methodology

The research was undertaken using mainly secondary data acquired from libraries. Articles

from the internet, journals, newsreels, books, and unpublished dissertations were used.


16

Internet sources also served as useful sources of news reports. Protocols and investment

legislations were also useful sources of information.

The study adopted qualitative approach. The data that was collected was analysed using

descriptive method. This method is used to study the current state of the issue being

investigated. Therefore, large amount of secondary data on Ghana-Nigeria trade relations was

analysed by descriptive method.

1.9 Arrangement of Chapters

Chapter one contains the research design. This includes the introduction to the study,

statement of research problem, objectives of the study, significance of the research,

hypothesis, rationale, theoretical framework, literature review, sources of data and the

arrangement of chapters. Chapter two examines the framework of the ECOWAS Trade

Liberalization Scheme and the nature of Ghana-Nigeria trade relations from 2000-2012.

Chapter three examines the framework of the GIPC Act, the history of Ghana’s use of

protective legislation, the effects that both the enforcement of the GIPC Act and the

ECOWAS Community Court of Justice decision would have on Ghana-Nigeria trade relations

and on community citizens. Chapter four provides a summary of research findings, conclusion

and proffers recommendations.


17

Endnotes

1 Brydon, L. (1985). Ghanaian responses to the Nigerian expulsions of 1983. African Affairs, Vol. 84, No. 337

(October), p. 563. 2 Ibid p. 564.

3 Okolo, J. E. (1988-89). Obstacles to increased intra-ECOWAS trade. International Journal, Vol. 44, No. 1

(Winter), p. 173. 4 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. 5 Brydon, L. op. cit. p. 570.

6 Ibid p. 564.

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.

75), Friedrich Ebert-Stiftung, Ghana. 8 Okolo, J. E. (1985). Integrative and regional integration: The Economic Community of West African States.

International Organizations, Vol. 39, No. 1 (Winter), p. 133. 9 Ibid.

10 Ibid p. 134.

11 Mytelka, Salience of gains, p. 240. Quoted in Okolo, J. E. (1985). Integrative and cooperative regionalism:

The Economic Community of West African States. International Organizations, Vol. 39, No. 1 (Winter), p. 134. 12

Haggard, S. & Simmon, B. A. (1987). Theories of international regimes. International Organization 41, No.

3: p. 494. doi: 10.1017/S0020818300027569. 13

Antwi-Danso, V. op. cit. pp. 74-75. 14

Otoghile, A. & Obakhedo, N. O. (2011). Nigeria-Ghana relations from 1960 to 2010: Roots of convergence

and points of departure. African Research Review, Vol. 5(6), Serial No. 23, (November), p. 142, doi:

http://dx.doi.org/10.4314/afrrev.v5i6.12. 15

Viotti, R. P & Kauppi, V. M (2012). International relations theory. Longman: New York, p. 145. 16

Haggard, S. & Simmon, B. A. op. cit. p. 493. 17

Viotti and Kauppi op. cit. p. 145. 18

Ibid. 19

Ibid. 20

Ibid. 21

Ibid p. 146. 22

Ibid p. 146-147. 23

Ibid p. 147. 24

Ibid. 25

Ibid. 26

Keohane, Neoliberal Institutionalism: A perspective in World Politics, 2. Quoted in Viotti, R. P & Kauppi, V.

M (2012). International relations theory. New York: Longman, p. 147. 27

Viotti & Kauppi op. cit p. 148. 28

Ibid p. 149. 29

Ibid p. 147. 30

Ibid. 31

Aghrout, A. (1992). Africa’s experiences with regional co-operation and integration: Assessing some

groupings. Africa: Rivista Trimestrale di Studi e Documentazione dell’Istituto Italiano per I’Africa e I’Oriente,

Anno 47, No. 4 (Dicembre), p. 563-586. 32

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. 428-436. 33

Ibid. 34

Ibid. 35

Ibid. 36

Brown, M. L. (1989). Nigeria and the ECOWAS Protocol on free movement and residence. The Journal of

Modern African Studies, Vol. 27, No. 2 (June), p. 252. 37

Onwuka, R. I. (1982). The ECOWAS Protocol on the free movement of persons: A threat to Nigerian

security? African Affairs, Vol. 81, No. 323 (April), p. 195. 38

Ibid. p. 200. 39 Essuman-Johnson, A. (2006). Immigration to Ghana. Journal of Immigrant and Refuge Studies, 4:1, p. 65

doi: 10. 1300/ J500v04n01_05.


http://dx.doi.org/10.4314/afrrev.v5i6.12

18

40

Ibid. 41

Ibid. p. 66. 42

Jiman op. cit. p. 23. 43

Ibid. p. 25.


19

CHAPTER TWO

OVERVIEW OF THE ECOWAS TRADE LIBERALIZATION SCHEME

2.0 Introduction

Across all regions of the world, integration efforts have been underway. Since the 1950’s,

Europe has demonstrated the benefits to be derived from integration. African countries took

much inspiration from Europe’s example, thereby motivating integration efforts in Africa.

The expected benefits to be derived from regional integration provided the context for the

formation of the Economic Community of West African States (ECOWAS).

This chapter deals with the circumstances leading to the formation of ECOWAS. It goes

further to examine the ECOWAS Trade Liberalization Scheme (ETLS). The ETLS allows for

the free movement of goods, services, capital and persons within ECOWAS. The chapter also

examines the nature of the bilateral trade relations between Ghana and Nigeria from the turn

of the 21st century to 2012 when the GIPC was promulgated.

2.1 Establishment of the Economic Community of West African States

Over the past fifty years, efforts at regional integration intensified in the developed and

developing countries. In developing countries, the leaders saw regional integration

programmes as a way towards achieving regional stability and integration. Sub-Saharan

Africa has held the bulk of the least developed countries. The huge mineral and natural

resources that are found in many of these countries have not helped lift them out of the

quagmire of underdevelopment and poverty, because of a dearth of adequate technology to

effectively harness their natural resources. This problem has made these countries to continue

to lag behind in terms of development and infrastructure.


20

It was this economic malaise that led the continent to seek regional and sub-regional

cooperation. This is aptly articulated in the Lagos Plan of Action:

The effect of unfulfilled promises of global development strategies has been more sharply

felt in Africa than in the other continents of the world. Indeed, rather than result in an

improvement in the economic situation of the continent, successive strategies have made

the continent stagnant and become more susceptible than any other regions to the

economic and social crisis suffered by the industrialized countries. Thus, Africa is unable

to point to any significant growth rate or satisfaction index of general well-being in the

last twenty years. Faced with this situation and determined to undertake measures for the

basic restructuring of the economic base of our continent, we resolved to adopt a far-

reaching regional approach based primarily on collective self-reliance.1

With the attainment of independence, there was a renewed sense of urgency among African

countries to alleviate the economic situation of dependence, underdevelopment, and the poor

economic condition that they found themselves in. There was also the realisation that,

accelerated development was tied to cooperation among states. The continent had always

been considered the least developed, even with the huge mineral resources that it has.

Dependence on the developed world for the achievement of their development goals had

failed to produce any tangible success. The leaders of African countries envisaged that, the

only way out of their economic malaise lay in sub-regional and regional cooperation.2 They

understood that economic integration at the sub-regional level is vital for achieving collective

self-reliance in Africa.

The most ambitious plan to bring the countries of West Africa within a single sub-regional

body was established in Lagos in 1975, by the French speaking member countries of the

West African Economic Community (CEAO), the member countries of the Mano River

Union (MRU), and Ghana, Nigeria, Benin, The Gambia, and Guinea-Bissau. Cape Verde

joined the organisation a year later. The francophone countries of West Africa, which

included, Senegal, Mali, Niger, Benin, Burkina Faso, Mauritania, Cote d’Ivoire, and Togo


21

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


22

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.


23

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


24

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


25

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


26

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


27

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


28

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.


29

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


30

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


31

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


32

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


33

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


34

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


35

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


36

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.


37

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

http://www.comm.ecowas.int/sec/index.php?id=asp010786&lang=en. 33

Ibid. 34

Ibid. 35

Ibid. 36

Ibid. 37

Produced in the Supplementary Protocol A/SP.2/5/90 on the implementation of the third phase (right of

establishment) of the protocol on free movement of persons, right of residence and establishment. Retrieved


http://www.comm.ecowas.int/sec/index.php?id=ap010579&lang=en

http://www.comm.ecowas.int/sec/index.php?id=asp010786&lang=en

38

from http://www.comm.ecowas.int/sec/index.php?id=asp020590&lang=en.

38 ibid

39 Produced in the Vienna Convention on the Law of Treaties.

40 Omorogbe op. cit. p. 362

41 Produced in Volume 17 June 1990 Official Journal of the ECOWAS, p. 22 Quoted in Omorogbe, Y. (1993).

The legal framework for economic integration in the ECOWAS region: An analysis of the trade liberalization

scheme. Hein Online. p. 362. 42


and points of departure. African Research review, Vol. 5 (6), Serial No. 23, November, p. 142. 43

Opoku-Darkwah, D. (2011). Ghana-Nigeria relations from 2001-2008. (Unpublished masters thesis)

University of Ghana, Legon. 44

Ghana Business News (2008), Nigeria Quoted in Otoghile, A. & Obakhedo, N. O. (2011). Nigeria-Ghana

relations from 1960 to 2010: Roots of convergence and points of departure. African Research review, Vol. 5

(6), Serial No. 23, November, p. 142. 45

Frempong .K. (2005). Why Nigeria’s ban on Ghanaian exports is illegal. Retrieved July 15, 2014 from

http://www.modernghana.com/print/118459/1/why-nigerias-ban-of-ghanas-exports-was-illegal.html. 46

Ibid. 47

Internet Television International. (2010, July 23). Reps frown against $5,000 movie levy. Retrieved from

https://www.youtube.com/watch?v=crR6_aX2pio. 48

Ibid. 49

Ayodele, T. & Sotola, O. (2010). Ghana’s Anti-Business Clampdown. Retrieved July 4, 2014, from

http://africanliberty.org/content/ghana’s-anti-business-clampdown 50


and points of departure. African Research Review, Vol. 5(6), Serial No. 23, (November), doi: http://dx.doi.org/

10.4314/afrrev.v5i6. 12. p. 142. 51

Ibid 142-143.



http://www.modernghana.com/print/118459/1/why-nigerias-ban-of-ghanas-exports-was-illegal.html

https://www.youtube.com/watch?v=crR6_aX2pio

http://africanliberty.org/content/ghana's-anti-business-clampdown

http://dx.doi.org/

39

CHAPTER THREE

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.


40

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


41

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


42

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


43

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


44

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


45

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


46

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


47

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


48

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.


49

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.


50

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.


51

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


52

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


53

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.


54

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.


55

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


56

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


57

strive to put away their differences and forge a truly cordial relations, that would see them

work within the framework of the ETLS.


58

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

http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=264691. 33

Ibid. 34

Ibid. 35

Ghanaian government chasing us out lament Nigerian bizman. Retrieved July 4, 2014, from

http://www.vanguardngr.com/2012/07/ghanaian-govt-chasing-us-out-lament-nigerian-bizmen/ 36

Ndiribe, O. & Ovuakporie, E. (2005). Reps ask ECOWAS to stop deportation of Nigerians from Ghana.

Retrieved July 9, 2014 from http://www.vanguardngr.com/2012/06/reps-ask-ecowas-to-stop-deportation-of-

nigerians-from-ghana/. 37 See The GIPC Act 865, 2013 for a full compliment of these provisions. 38

Ibid.


http://www.gipcghana.com/about.html

http://ynaija.com/ghana-closes-down-shops-of-illegal-foreign-traders-nigerian-businessmen-protest/

http://ynaija.com/ghana-closes-down-shops-of-illegal-foreign-traders-nigerian-businessmen-protest/

http://www.africanmanager.com/site_eng/detail_article.php?art_id=19062

http://www.imanighana.com/2012/07/imani-the-anti-ecowas-foreigner-trading-policy-is-incoherent%20/


https://www.youtube.com/watch?v=qo1JgLtvA4M

http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=264691

http://www.vanguardngr.com/2012/07/ghanaian-govt-chasing-us-out-lament-nigerian-bizmen

http://www.vanguardngr.com/2012/06/reps-ask-ecowas-to-stop-deportation-of-nigerians-from-ghana/

http://www.vanguardngr.com/2012/06/reps-ask-ecowas-to-stop-deportation-of-nigerians-from-ghana/

59

39

Macdonald op. cit. gives a comprehensive account of Nigeria’s use of restrictive legislation in the 1960’s and

70’s. 40

Retrieved April 11, 2012 from

http://www.nigeria-law.org/Nigerian%20Investment%20Promotion%20Commission%20Act.htm. 41

Ibid. 42

Contained in Article 76 of the Revised ECOWAS treaty. 43

Retrieved April 8, 2014 from

http://www.courtecowas.org/site2012/index.php?option=com_content&view=article &id=2&Itemid=5. 44

Retrieved May 12, 2014 from

http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=292664. 45

Ibid. 46

Retrieved June 6, 2014 from

http://www.toafrica.net/(S(uxtzvjjokkmvlgfbvxsurx55))/Item.aspx?id=5337. 47

Dogbevi, E. K. (2012). Trade Barriers cause Africa to lose billions of dollars in potential earnings- World

Bank, retrieved July 21, 2014, from http://www.ghanabusinessnews.com/2012/02/09/trade-barriers-cause-

africa-to-lose-billions-of-dollars-in-potential-trade-earnings-world-bank/. 48

Retrieved May 9, 2014 from http://www.spyghana.com/ghanaian-traders-close-shops-days/. 49

Retrieved February 8, 2014 from http://www.myjoyonline.com/business/2014/July-15th/police-orders-suame-

artisans-to-reopen-nigerian-shops.php. 50

Jimam op. cit. p 25. 51

For an appraisal of the difference between Ghana and Nigeria’s ideology on African Unity, see Thompson, S.

W (1969). Ghana’s Foreign Policy 1957-1966: Diplomacy, Ideology and the New State. New Jersey: Princeton

University Press. Especially Chapter 6.


http://www.nigeria-law.org/Nigerian%20Investment%20Promotion%20Commission%20Act.htm

http://www.courtecowas.org/site2012/index.php?option=com_content&view=article&id=2&Itemid=5


http://www.toafrica.net/(S(uxtzvjjokkmvlgfbvxsurx55))/Item.aspx?id=5337

http://www.ghanabusinessnews.com/2012/02/09/trade-barriers-cause-africa-to-lose-billions-of-dollars-in-potential-trade-earnings-world-bank%20/


http://www.spyghana.com/ghanaian-traders-close-shops-days%20/

http://www.myjoyonline.com/business/2014/July-15th/police-orders-suame-artisans-to-reopen-nigerian-shops.php


60

CHAPTER FOUR

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

4.0 Introduction

This chapter is divided into three parts comprised of summary of findings, conclusion and

recommendations.

4.1 Summary of Findings

The study sought to examine the nature of Ghana-Nigeria bilateral trade relations from 2000-

2012 within the framework of the ECOWAS Trade Liberalization Scheme. It also sought to

examine the effects that both the enforcement of the GIPC Act in 2012, and the decision of

the ECOWAS Community Court of Justice that the enforcement of the GIPC Act does not

contravene the ETLS would have on Ghana-Nigeria bilateral trade relations and on

community citizens from Nigeria.

The foundations of Ghana-Nigeria relations can be traced to their regular interactions

as part of British West Africa during colonialism. After independence, to alleviate the

overly dependent and poor economic nature of their economies, they, in concert with

other West African countries formed the Economic Community of West African

States. An economic union that was to serve as a launch pad for their mutual

economic revival.

The main aim of ECOWAS is to reorient the economies of member states and to

remove all barriers that impede trade among member states and to coordinate their

economic activities with non-member states. One of the essential agreements that


61

govern the actions of member states is the ECOWAS Trade Liberalization Scheme

(ETLS).

The ETLS is the mechanism that governs the migration of community citizens and

movement of goods within the Community. The ETLS holds a position of prominence

in ECOWAS. It was one of the first achievements of ECOWAS and the Protocol on

the free movement of persons is the only aspect of the ECOWAS Treaty that is

directed at community citizens. The ECOWAS Protocol on the free movement of

persons has three complimentary phases: the right of entry, the right of residence and

the right of establishment.

The 1980’s expulsions of Ghanaians from Nigeria highlighted the role that the

ECOWAS Trade Liberalization Scheme held in their relations. It showed that the

actions of member states are scrutinized under the framework and that the citizens of

member states were conferred with rights that can be easily assessed in light of the

ETLS Protocol. Though at the time of the expulsions only the first phase had been

implemented, the second and third phases of the Protocol on free movement were

subsequently signed in 1986 and 1990 respectively.

In 2006, Nigeria imposed a ban on the importation of a number of products from

Ghana. The ban on Ghanaian products threatened bilateral trade relations between the

two countries. The Ghanaian government argued that the ban was in contravention of

the ECOWAS Trade Liberalization Scheme that allows free access to goods from

other member states. Though both countries made overtures to normalize their trade


62

relations, there have been claims and counter claims of the placement of systemic

challenges that impede their citizens engaging in business in the territory of the other.

In 2012, the Ghana Investment Promotion Centre enforced the GIPC Act 478, 1994.

The provisions of the Act provides that engagement in retail trade is the preserve of

Ghanaians and foreigners can only take part if they meet certain minimum investment

thresholds. The Ghanaian government pointed out that Nigerians who were engaged

in retail trade, failed to meet the stipulated threshold and so their shops were closed

down. This action further strained the trade war that was had been a feature of their

trade relations since 2006.

The affected Nigerian traders sought redress from the ECOWAS Community Court of

Justice, arguing that the actions of the Ghanaian government was in contravention of

the ETLS that provides that they should be treated as community citizens who have

identical rights as Ghanaians. The Ghanaian government argued that the closure of the

shops of Nigerian traders was not in contravention of the ETLS. The Court dismissed

the case holding that the actions of Ghana were not in contravention of the ETLS.

4.2 Conclusion

From the analysis of the data gleaned from the research, it can be concluded that the nature of

Ghana-Nigeria relations has been negatively affected by the enforcement of the GIPC Act

478, 1994. Though the first half of the first decade of the 21st century saw the existence of

highly cordial and beneficial trade relations between both countries due to the kindred spirit

that existed between Presidents Kuffour and Obasanjo, the second half birthed the trade war

between both countries, a fact that culminated in the enforcement of the GIPC Act. The


63

actions of Ghana adjudged by the ECOWAS Community Court of Justice as not being in

contravention of the free movement of persons, goods and services would further strain their

relations.

4.3 Recommendations

In spite the findings from the research that the promulgation of the GIPC Act has led to the

further deterioration Ghana-Nigeria trade relations, both countries have taken positive steps

to engender cooperation. This shows that the mutually beneficial nature of their relations

serves as impetus for them to make efforts to regulate their trade and bring it in tune with the

ECOWAS Trade Liberalization Scheme. To achieve this goal, the study proffers the

following recommendations for consideration.

Ghana and Nigeria need to harmonize their investment legislations to allow for the

free flow of factors of production between them as required by the ECOWAS Trade

Liberalization Scheme. The government of Ghana should also provide non-

discriminatory measures to community citizens from other West African Countries;

this would strengthen the integration goal of ECOWAS and would provide

community citizens with the necessary drive to move and trade freely within the

community thereby strengthening the link between the citizens of member states.

The Ghanaian government should initiate schemes that would provide loans to

Ghanaian traders. This would make them competitive in the retail sector. The

minimum capital requirement threshold that is embodied in the Revised GIPC Act

865, 2013, can continue to hold for foreigners who are not from member states of the

community. However, the same requirement should not be in place for community

citizens as it could affect the integration prospects of the community.


64

The trade war that has been a feature of Ghana-Nigeria relations since 2006 has led to

a sizeable amount of revenue loss. It has also affected the volume of trade between

both countries. Both countries should create a forum that would allow for regular

interactions between them. This would reduce the incidence of their trade disputes. It

would also allow for consensus building rather than disputes both countries.

Both governments should initiate schemes that would educate people on their rights

and obligations as community citizens. There should also be the education of

community citizens from other member countries on their obligations under the

ECOWAS framework, that is, possession of adequate documentation, renewal of

residence permits, registration of their businesses with the relevant national

institutions and the regular payment of taxes.

The telecommunications networks can be used to remind community citizens that

intend to be in either member states after the initial ninety days. The same medium

can be used to provide the phone numbers, addresses, emails and websites of the

relevant institutions that can provide the necessary information and services, like

renewal of residence permits etcetera. They can also use fliers and billboards at the

point of entry to educate visiting community citizens.

Ghana and Nigeria possess sixty-one percent of the population and sixty-eight percent

of the GDP of ECOWAS. This shows that they hold considerable influence in

ECOWAS. For them to achieve their future aim of transforming ECOWAS from a

community of states to a community of people, cooperation is of the essence.

Cooperating to fully implement the ETLS would derive considerable benefits for their


65

economies. This is particularly important because the success of the Protocol is a

necessary pre-condition for achieving sub-regional integration.

It is the hope of this research that if these recommendations were given appropriate

consideration, relations between Ghana and Nigeria would see considerable improvement

that would also see them leading the way in the actualization of the objectives of ECOWAS.


66

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