• M74 Editorial Team

Trade Relations between Nigeria and Ghana

Updated: Jan 18

By Ifeoluwa Oseni

It is said that when two elephants fight, the grass suffers, meaning that the weak get hurt in conflicts between the powerful. In West Africa, the two major powerhouses in the region are Nigeria and Ghana. Both countries are successful and independent, and they are the top two richest West African countries. Although they do not share a land border, they have long been comrades, helping each other especially in times of economic crisis.

Nigeria and Ghana are both English-speaking West African countries and members of the Economic Community of West African Countries (ECOWAS), and other international organisations such as the Organisation of African, Caribbean, and Pacific countries (ACP), the International Monetary Fund (IMF), the United Nations (UN), and the African Union (AU), with Nigeria also being a member of the Organisation of the Oil Producing Countries (OPEC).

Nigeria's population is more than six times that of Ghana, Nigeria's surface area is almost four times the size of Ghana and Nigeria’s GDP is six times that of Ghana. Yet, the GDP per capita of both countries are similar, with Nigeria’s GDP per capita slightly smaller than Ghana's. According to CountryEconomy, Nigeria has a population of close to 196 million while that of Ghana is almost 30 million. Nigeria's surface area is roughly 924 thousand sq. km and that of Ghana is 239 thousand sq. km. The 2018 gross domestic product (GDP) of Nigeria was $398.186 billion and that of Ghana was $65.518 billion. The GDP per capita of Nigeria that same year was $2,028 while that of Ghana was $2,203.

The top five commodities Nigeria exported to Ghana (data as of 2018) according to the Observatory of Economic Complexity (OEC) are scrap vessels, pasta, aircraft, flavoured water, and rolled tobacco. Ghana’s top five export products to Nigeria include chocolate, nonaqueous paints, palm oil, hard liquor, and coffee and tea extracts. The value of goods Nigeria exported to Ghana in 2018 was $317 million while export from Ghana to Nigeria was worth $87.9 million that same year.

While both countries are undoubtedly leaders in West Africa and good trade partners, there have also been clashes of interest between the two countries. Nigeria and Ghana have been at loggerheads over trade for decades, but without serious consequences. It has been alleged that Nigerian traders in Ghana were harassed and their shops closed. This might be seen as a retaliation by Ghana on Nigeria for closing its land border without notice in August 2019, which is believed to have hurt businesses in Ghana.

Shops of other nationals were closed in Ghana because of the Ghana Investment Promotion Centre (GIPC) Act 2013 that allows only Ghanaians to be retail traders except for those foreigners that can invest $1 million in cash or goods and can employ at least twenty skilled Ghanaians. Nigerian traders seem to be the most affected by this law in 2020.

Retail traders of Nigerian origin who do not meet the requirements of this law in Ghana defend their participation in retail trade in the country by using the ECOWAS protocol law. This law removes trade barriers in West African countries and harmonises trade policies in all thirteen West African member countries, including Nigeria and Ghana, through the establishment of a free trade area, a customs union, and a common market.

The GIPC act and ECOWAS protocol law contradict each other, and each country uses the rule that favours its own interests when it has a clash of interest with another country.

Ghana’s Minister of Information, Endkojo Nkrumah, said there is evidence to prove that Nigeria has pursued its national interest at the detriment of other nations, including Ghana. The Ghanaian Foreign Minister, Shirley Ayorkor Botchwey, also said that many Ghanaian export businesses almost went bankrupt because their goods were stuck at the Seme Border for months following Nigeria’s border closure in August 2019. Nigeria claimed that its porous border was used in smuggling goods, especially rice, from other countries. The shutting down of the border in an exercise code-named ‘Ex-Swift Response’ was jointly conducted by the Nigerian customs, immigration, police and military. The Nigerian government believed that the total ban on the importation of all goods via its land border would help boost local production of goods and also prevent illegal moves of goods into the country.

In short, both countries fight to protect their own interests. Furthermore, the actions taken by one country have much effect on the other country, and the other country will retaliate accordingly.

To douse tensions, representatives of Nigeria had a “Legislative Diplomacy Bilateral Meeting” with representatives of Ghana in September 2020. The two parties issued a communiqué after the meeting, which stated that measures should be taken to support law-abiding traders, and to alleviate the trade challenges caused by the alleged closure of the retail stores. Nigeria also appealed to Ghana to look at the GIPC Act.

Nigeria’s trade minister, Otunba Richard Adeniyi Adebayo, said Nigeria was exploring diplomatic options in resolving the trade dispute with Ghana. The Nigerian trade minister also met with the Ghanaian trade minister, Alan John Kwadwo Kyerematen, to discuss the issues surrounding Nigerian businesses in Ghana.

In 2018, a year before Nigeria closed its border, the Nigerian government summoned the Ghanaian High Commissioner, Rashid Bawa, to Nigeria to explain why over 400 Nigerian businesses were closed in Ghana. Bawa stated then that he was in Ghana, and that almost all the Nigerian shops had been opened. He also stated that his country was making moves to ensure the registration of Nigerian traders in Ghana, and to grant them a residence permit.

When Nigeria closed its border in 2019, the foreign trade report released by Nigeria’s National Bureau of Statistics (NBS) revealed Ghana to be Nigeria’s biggest export destination, which had never been the case before. The export brought ₦908.5 billion to Nigeria and revealed that Ghana topped Nigeria’s export destinations in the third quarter of 2019 with goods such as cable sheaths of iron, submersible drilling platforms, and crude oil imported to Ghana from Nigeria. At the end of 2019, Ghana became Nigeria’s largest single trading partner and accounted for 17.18% of Nigeria’s total export that same year.

While there have been several trade disputes between these two West African giants, it is obvious that there is no trade war. Top members of each government regularly reach out to the other country to resolve issues quickly. Both countries know that a trade war will not be in the best interest of its citizens who are in diaspora. Being a member of international organizations like ECOWAS has not only made trading easier, but it has also made resolving trade disputes easier. Countries may have trade and diplomatic issues, but that doesn't stop them from trading with each other.

Ifeoluwa Oseni is an intern at M74, and a recent graduate from the University of Ibadan in Nigeria, where he studied Computer Science. His interests include cybersecurity, politics, and technology. He loves telling stories of positive changemakers in Africa on his blog, InterviewStories.

The views expressed above are those of the author and do not reflect the official position of the M74 Group, which remains neutral on all matters. Publishers assume no liability for content.