State losing revenue as foreign retailers bypass GIPC Act 865                                            

By Elizabeth PUNSU   

“A person who is not a citizen may engage in a trading enterprise only if that person invests not less than US$1million in cash or relevant goods and services in the enterprise, as required under the Ghana Investment Promotion Centre (GIPC) Act 865.”

It is a bright day at the Suame Magazine Market in Kumasi, where bustling activity among the energetic youth reflects the daily struggle to make ends meet. Most traders here deal in automotive spare-parts, mechanical services and related retail activities.

In Ghana, retailing is legally reserved for locals as the GIPC Act 865 (Section 27a) states:
“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 GIPC is also mandated to register, monitor and keep records of all enterprises in Ghana – both local and foreign.

However, at Suame Magazine retailing – meant to be the preserve of Ghanaians – has increasingly been taken over by Nigerian traders, according to several local operators.

“Most of them have migrated here,” said Prince Sarfo, a mechanic at the Asawase Renault shop, in an interview with Business and Financial Times.

Mr. Sarfo has worked at the shop for over 20 years, having stayed on after his apprenticeship due to limited access to land or space to start his own business. He said over the years he and his colleagues have encountered numerous Nigerian traders engaging in retail around Kumasi.

He revealed that he often buys spare-parts from a nearby Nigerian-owned shop because they consistently have what he needs. However, he has never received a proper VAT receipt from the trader.

He added that this practice is widespread: “I’ve done this business for over 20 years. Only a few traders give us VAT receipts. The last time I got a VAT receipt from the Magazine was around 2018 or 2019. Since then, no one has issued me one. There’s one man at the Magazine who can get you a VAT receipt,” he said.

Prince further admitted that he sometimes prefers buying from the Nigerian traders because their prices are lower and they always have stock. The presence of these traders has intensified competition for local operators, who believe they are at a disadvantage due to taxes.

Ashanti Regional Chairman-Ghana Union of Traders Association (GUTA) Anthony Oppong explained:
“Our goods are more expensive because of the numerous taxes we pay. Most of these Nigerian and foreign traders do not pay any form of taxes. They hide behind the ECOWAS treaty and bring in goods without paying taxes. How do you expect me, who pays over 12% VAT, to compete with such a person?”

He added that this tax disparity is part of what has allowed foreign traders, particularly Nigerians, to “take over the market”.

Both the GUTA chair and Mr. Sarfo allege that some foreign traders use unapproved routes to bring in goods – especially those who have not registered with the GIPC.

Mr. Oppong told Business and Financial Times that many of the Nigerian, Egyptian, Turkish traders do not have a definite address for easy tracing.

“They do not have any form of address; they employ a few locals and use them to sell their goods. They have warehouses somewhere in town, come to the markets with their complimentary cards and give them to unsuspecting people. Later, they supply goods on the blind side of city authorities, evading taxes – especially income tax, PAYE.”

Mr. Sarfo for his part claimed that most foreign traders do not issue proper receipts and their activities could facilitate illicit financial flows. “They change their money into Naira and send it back to their country after making sales. They do not save in local banks. They send the money through their counterparts,” he alleged.

Mr. Oppong further cautioned that: “Beyond the significant losses in taxes and national revenue, Ghana risks having its trading activities dominated by foreign entities in the coming years – a development he describes as dangerous, a potential national security threat and a setback to employment opportunities for the country’s growing youth population”.

This situation made GUTA raise serious concerns and go ahead to close down several shops belonging to Nigerian and other African nationals sometime this year – creating tension in especially Abossey Okai Market, a major spare-parts market in Accra.

In response to these escalating tensions, Director of Events and Programmes at Afrocentric Network, Seyiram Fiakeye, has called for a full audit and review of the GIPC Act 865. Afrocentric Network advocates for the freedom of Africans to trade and work freely across the continent.

In an interview with B&FT, Mr. Fiakeye argued that the Act disproportionately favours elite investors while restricting ordinary African traders.
“To our lawmakers: Why craft laws like GIPC Act 865 that protect no one but elite investors? How many ordinary citizens can raise US$1million or employ 20 skilled workers to sell phone accessories or clothes?” he questioned.
“These policies are colonial relics disguised as economic reform and must be dismantled.”

He cautioned that Africa cannot afford internal conflict when facing global economic pressure. “While other continents build global empires, we are busy fighting over stalls in Kasoa,” he said.

He called for: An immediate end to targetted actions against Nigerian and other African traders; Equal enforcement of trade laws – if other foreign nationals engage in retail, the law must apply across the board or be amended for fairness; A full audit and public-centred review of GIPC Act 865 and related restrictions; and a nationwide campaign to promote African unity, economic cooperation and cultural pride.

The debate over foreign participation in retail trade at Suame Magazine highlights tensions between enforcement of existing statutes, the realities of cross-border commerce under ECOWAS and concerns about tax compliance and illicit financial flows. Traders, unions and civil society groups say the situation requires urgent, transparent action to ensure fairness for local businesses while protecting legitimate pan-African trade.

A news publication on Ghanaweb.com indicates that the country loses more than          US$9billion to corruption, tax evasion and smuggling – which are all enablers of illicit financial flows (IFFs).

More often than not, tax evasion comes about when individuals and business owners either underdeclare goods and services or, most importantly, do not have their business registered with the appropriate quarters. This makes it difficult for law enforcement agencies to track them easily for identification and collection of what is due the state.

GIPC 2024 investment report

In GIPC’s 2024 investment report, a total of 140 projects were registered by the GIPC, marking an 11.48% increase compared to 2023. However, the FDI value decreased by 5% from US$649.58million in 2023 to US$617.61million in 2024.

At the end of fourth-quarter 2024, one hundred and forty (140) projects were registered by GIPC with total estimated investment cost of US$651.72million. This comprised a FDI component of US$617.61million and local component of US$34.11million. Total initial transfers amounted to US$ 31.25million.

Of the 140 projects registered, 107 were wholly foreign-owned, representing 76.43% of the projects with a total estimated investment cost of US$341.65million. The Joint Venture projects between Ghanaians and their foreign counterparts were 33, representing 23.57% of the projects and with a total estimated investment cost of                  US$310.07million. Of the total, general trade had 15.

A total 15,328 jobs are expected to be generated from the 140 projects registered in 2024, with operations at full capacity. 13,733  -representing 89.59% of the total jobs – will be for Ghanaians and the remaining 1,595 representing 10.41% will be for non-Ghanaians. Only 10 projects were in Ashanti Region.

Nigerians had five of the registered projects.

Renewal of GIPC Registration: From January to December 2024, 694 companies renewed their registration with the Centre. Under the GIPC Act 865, companies are required to renew their certificates every two years. Of the 694 companies that renewed their registrations, 455 were wholly foreign companies, 165 were Joint Venture companies involving Ghanaians and 74 were wholly Ghanaian companies.

Consequently, if the GIPC Act 865 continues to be poorly enforced, the country risks losing billions of cedis – despite significant contributions made by the few companies that consistently register and renew their permits as required.

This story received support from Oxfam in Ghana, through the Norwegian Agency for Development Cooperation. Any financial assistance or support provided to the journalist has no editorial influence.

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