Ghana’s Ministry of Trade and Industry has given a 27 July 2018 deadline requiring all foreign nationals in the retail industry to cease trading or face legal action. Ghana has had a law in place since 2013 banning foreign-owned retail, and the government has been under pressure to curb the proliferation of Chinese traders.
Ghana’s government has issued a new deadline for foreign retailers. The new notice cites section 27 (1) of the GIPC Law 2013, (Act 865) which states that, “A person who is not a citizen or an enterprise which is not wholly owned by a citizen shall not invest or participate in the sale of goods or provision of services in a market, petty trading or hawking or selling of goods in a stall at any place.”
The move has been precipitated by ongoing and longstanding complaints from members of the Ghana Traders Union Association (GUTA). In particular, the catalyst has been the gradual expansion by Chinese traders from importing Chinese made goods to retailing Chinese made goods, to move into other areas of trading (such as street food).
Ghana is not the only country grappling with the impact of Chinese retailers. For more than a decade, traders in Lesotho have complained, often violently, about the pervasiveness of Chinese nationals in the retail sector. In effect, Chinese traders now run significant parts of the retail sector in Lesotho, marginalizing indigenous traders and causing ethnic tension. A recent report noted: “Such is the entrenchment of Chinese hegemony in Lesotho and elsewhere that even the smallest retail outlet in the remotest village or steeple is said to be owned by a Chinese national.” In Zimbabwe, opposition leader Nelson Chamisa has pledged to rid the country of investment from China if he wins the elections this July. At a rally in May, he told crowds that China was “asset stripping” Zimbabwe. In South Africa, there are between 350,000 and 500,000 Chinese nationals. Most are involved in training and some are now reportedly considering leaving the country as sinophobic attacks rise.
The disquiet around Chinese traders has an echo in the expulsion or Asian traders from Uganda in 1972 when 50,000 Asians (mostly of Indian origin) were forced to leave the country. Then, as now, there is a tension between the unrest from small traders and the understanding at a macro level that whole supply chains – notably in areas such as textiles, plastics, and homewares, have become entirely reliant on Chinese traders. Removing them runs a major risk of disrupting supply. This is certainly true in Ghana and Lesotho.
In June 2017, McKinsey published an in-depth study on the extent of Chinese engagement in Africa. Its headline finding:
“In the past two decades, China has catapulted from being a relatively small investor in the continent to becoming Africa’s largest economic partner. And since the turn of the millennium, Africa–China trade has been growing at approximately 20 percent per year. Foreign direct investment has grown even faster over the past decade, with a breakneck annual growth rate of 40 percent. Yet even this number understates the true picture: we found that China’s financial flows to Africa are around 15 percent larger than official figures when nontraditional flows are included.”
In other words, the risks are not just limited to supply chain disruption. There are significant risks across the many areas of Chinese investment and activity – such as infrastructure and energy – if hostility to Chinese influence forces a rethink in China of where companies and government investment should be targeted.