Trade between Nigeria, Ghana won't be a reality until… – Envoy

With over 170 million population, Nigeria is regarded as an economically viable ground by foreign investors.

As the biggest market of the West Africa sub-region, Nigeria’s neighbours look towards it as a huge market for their locally produced goods. Unfortunately, access among the countries in the sub-region has been hampered by adverse protectionist policies that exist from one country to another.

Many efforts have been made by Economic Community of West African States (ECOWAS) to achieve economic integration in the sub-region, one of which was the recent adoption of Common External Tariff (CET) in February 2016 as an instrument for the harmonisation of tariffs in the ECOWAS sub-region and strengthening its common market.

However, policies such as External Trade Liberalization Scheme (ETLS) described as one of the instruments for promoting the West Africa region as a free trade in tandem with one of the objectives of creating a common market through "the liberation of trade by abolition among member states, of custom duties levied on imports and exports, and the abolition among Member States of non-tariff barriers, according to Article 3 of ECOWAS treaty” has so far yielded no significant result as exporters in the sub-region complain of lack of implementation at various borders.

While trade exchange between West African countries and the Western World and China grow by the day, the reverse is the case for trade growth within West Africa.

In Nigeria, for example, about 2.36 percent and 2.85 percent of its export in the year 2010 and 2011 respectively went to ECOWAS member states as against 97.64 percent and 97.15 percent that went to the rest of the world as recorded by ITC in the Trade Map Statistic.

In the case of Nigeria-Ghana trade relation, the two countries control about 61 percent of population and 68 percent of Gross Domestic Products in ECOWAS, but exporters from both countries have often complain of frustrating barriers at exporting into each other’s territories despite the ETLS instrument.

COMTRADE data showed that bilateral non-oil trade between Nigeria and Ghana increased from less than $15million before 2000 to more than $130million in 2010, while non-oil exports from Ghana to Nigeria increased from less than 0.5percent in the late 1990s to about 1.9 percent of its global exports in 2010.

International business experts opined that trade share between the two countries could be higher but for barriers at the borders, cumbersome process of products registration, less collaboration between the two countries’ standard agencies and prohibition factors that exporters had to continuously contend with.

Ghana’s president, John Mahama in October 2014 had harped on the lack of genuine integration between the two countries when he urged Nigeria to open up its market and not be afraid of competition. “Nigeria has nothing to fear from Ghana. You must learn to compete with Ghana. You are the largest economy in Africa,” said President Mahama.

He had urged for an order whereby Ghana manufacturers can export their textiles and processed goods into Nigeria and vice versa. “I think that will make our countries stronger,” he submitted.

A total of 42 items of their exportable goods on Nigeria's Prohibition List deters Ghana’s manufacturers from exporting to the Nigerian market. Some of the exporters interviewed revealed how their products had been prohibited from entering Nigeria on several occasions due to the prohibition list.

This, according to them, violates the ETLS which is meant to eliminate barriers to intra-regional trade and has been the stumbling block for Ghana manufacturers in their efforts to expand their business to Nigeria which is Africa's largest market.

On the other hand, traders from other countries also complain that Ghana sometimes rejects entry of duty-free products originating from ECOWAS countries while also applying additional high tax rates and sundry fees which are not custom duties but are charged on all imports such as statistical fee, processing fees, and, or sometimes, export levy fees.

Earlier in the year, members of Association of Ghana Industries mounted pressure on Ghana’s Minister of Trade and Industry, Dr. Ekow Spio-Garbrah, demanding that their government introduce policies that could make things difficult for Nigerian exporters as a way of sending a message to the Nigerian government to review its policy.

Chief Executive Officer of Association of Ghana Industries, Seth Twum while speaking recently to Business and Financial Times (B&FT) said, “There should be a clear letter written to the Nigerians complaining about this, and then also, our government should use diplomatic means to quickly resolve the restriction being meted out to Ghanaian exporters. If it doesn't work, then, we must also look at countervailing measures; it could be product targeting.”

Nigerian export company, Dangote Cement has started feeling the heat. After several protest by competitors in the country, Ghana Revenue Authority (GRA) in January 2016 increased freight charge from $26 to $60 per tonne on imported cement.

A March 10 report published by Ghana Business News indicated plans to put legislative instrument in place to restrict the importation of cement. According to the report, the Minister of Trade, Dr. Ekow Spio Garbrah had avowed: “Cement Manufacturers Association of Ghana has the capacity to produce about 9million metric tonnes of cement, while cement production projects are expected to add a further three to four million metric tonnes annually. The idea was to put in place a policy and if necessary, a legislative instrument to restrict the importation of cement.”

Already, Section 18 of Ghana Investment Promotion Centre Act, 1994 (Act 478) prohibits “non-Ghanaians from sale of anything whatsoever in a market, operation of taxi service, all aspects of pool betting business and lotteries, except football pools, operation of beauty salons and barber shops.” Nigerian Union of Traders, Ghana (NUTAG) believed the act was targeted at Nigerians purposely to drive home a point to the Nigerian government about her restriction of other nationals in her market.

Nigeria’s acting High Commissioner to Ghana, Mrs. Adekunbi Sonaike Ayodeji in an exclusive interview explained the motive behind Nigeria's import prohibition list and why ETLS may not have been applicable in certain cases.

“It is true that part of the sovereign right of a nation is going to be released as a result of being a member of regional or international organisation in the spirit of integration, but the fact still remains that every country owes it as an obligation to protect its territory and its nationals. Nigeria's Prohibition List is as a result of realising that some of these products coming from abroad is not allowing the domestic ones to be patronised and are putting pressure on the locally-made goods.

Also, most of these products do not meet the standard set up by standard boards. Most of these products could also be eating deep into our foreign reserve. So, it's not totally out of place to put measures in place despite our focus on integration.

“For example, if you enter into a protocol in negotiation, taking it back to individual country, there's implementation process. In the process of implementation, every country has a right to say, “I want a clause on this aspect of the protocol,” or “this aspect of it will not be applicable” in order not to obliterate what you stand for as a country.”

Regarding the GIPC Act, she refuted the assertion that such law is targeted at Nigerians. Instead she drew a parallel between the GIPC objective and that of Nigeria's Prohibition List. “From my understanding of the GIPC Act, it is an enactment of the parliament, so I wouldn't accept that it is targeted at one country, even though the population of Nigerian traders is high.

Also, in the case of Nigeria, we have prohibition list what Nigeria is saying is that: as a result of our internal policy, we have to protect certain young industries. So, I could say the GIPC Act might have taken the decision with similar objective.

“In short, the GIPC Act is a means of protecting the average Ghanaian products and nationals vis-à-vis other foreigners or products, the same way the Prohibition List is a means also by which Nigeria ensures it is not a dumping ground, and therefore also protecting our young industries.”

Probed about the possibility of the sub-region frustrating the initiative of the Nigeria Export Promotion Council to create1.5m jobs via Nigerian Diaspora Export Programme (NDEX) in the face of the impediment other countries are facing in penetrating Nigeria’s market, she stressed that Nigeria’s import Prohibition List is not meant to discourage economic integration in Africa.

“It is to protect the consumption of certain products that are being brought to Nigeria. Nigeria’s Prohibition List doesn't portray us as fiat on every imported goods, especially from West African countries. In as much as you are protective of your domestic products, it doesn't mean you are not leaving room for importation. It's just that you are in firm control of the percentage of what goods that are allowed into the country.”

Reacting to President Mahama's appeal to Nigeria to open its market for Ghanaian exporters, so that the same could be done for Nigeria, she said Nigeria will begin to see Ghana as no threat the moment Nigerian industries could stand the competition with it manufactured goods, especially textiles.

“Is Nigeria’s textile, as of today, competitive to that of Ghana? Until you reach a plain level with each other, competition cannot be fair. If our industries are viable, Nigeria will not see any threat, but as it is now, we are not on that level that we can allow competition. President Mahama is right, by saying there's no need for competition, but there's need for protection.”

She, however, expressed hope that the Nigeria-Ghana Joint Commission will go a long way in creating a platform where mutual agreement would be made in solving grey areas in Nigeria-Ghana bilateral relations, as such commission will feature Ministries, Departments and Agencies (MDAs) from both countries. “We are coming to the table to discuss issues that'll economically benefit the two countries.

This Nigeria-Ghana Joint Commission is a preferential package that allows certain barriers to be eliminated for countries involved. So, Nigeria and Ghana still has a lot to discuss under the joint commission. We are not stopping at the joint commission; we are taking it to bi-national.

This means the discuss will cut across all issues such as economy, social, political and so on, and this will affect so many things in terms of negotiation and positioning in international organisation, and protecting each other's interest.”

The Joint Commission, she added, will also address the issue of cooperation between the two countries’ standard boards, believing such a development will reduce frustration exporters of both countries go through in certifying their products.