GUTA’s anti-competition gambit

Over the past couple of days the long-running tussle between the Ghana Union of Traders Associations and Nigerian retailers in Ghanaian markets has come to a head. GUTA having correctly claimed victory by having succeeded in forcibly closing the shops of Nigerian retailers recently, is now insisting on being shown the relevant documentation which confirms that they have met the requirements of Ghana’s investment code as it pertains to foreigners engaged in retail activities.

Instructively though, their victory is proving not to be one shared by Ghanaian consumers; to their chagrin, Ghanaian shoppers have been subject to significant price hikes on a variety of goods hitherto offered by both Ghanaian and Nigerian retailers, but now offered mainly only by the former.

This should have been expected. While GUTA has always claimed nationalistic grounds for insisting on the implementation of a law that indeed is very much part of Ghana’s investment code, the banning of Nigerian retailers is at its core, an anti-competition policy. Experience should have taught that anti-competition legislation ultimately taxes the consumer.

Actually, government has been well aware of this which is in part why it has declined to actively implement this aspect of Ghana’s investment code despite persistent prodding by GUTA. While successive administrations in Ghana have claimed to defer implementation of this aspect of the country’s investment code because it contradicts ECOWAS protocols on the economic rights of citizens of member states – the argument which Nigeria itself had based its position on until its government imprudently closed its Seme border and lost all moral right to claim ECOWAS protocols –  they have also been acutely aware of the likely consequences to local consumers of letting GUTA have its way.

However political considerations had forced each successive government in Ghana to tactfully sit between both counterparties, deferring implementation of the law but not trying to abolish it in the hope of not offending either side until its tenor in office ended and it became someone else’s problem.

The current government no longer has that luxury. At a time that the Nigerian government is blatantly ignoring ECOWAS protocols, those protocols cannot be a consideration in settling the situation here in Ghana. However, the incumbent government may be wise to do the maths and decide whether its is more politically prudent to annoy GUTA members or to annoy their customers, who are far more in numbers and who are now becoming painfully aware that their best fortunes lie with the foreign retailers rather than GUTA.

It is time to resolve this issue permanently. To do this government needs to consider the political exigencies carefully.

The preferred solution should put the Ghanaian retail shopper first, although government should also use the issue as leverage to ensure that Nigeria starts consistently obeying ECOWAS trade protocols with regards to Ghanaian products.

Instructively, this newspaper understands that an ongoing revision of Ghana’s investment code is looking to remove the restraints on foreign participation in retail trade because modern retail shopping facilities such as shopping malls require foreign direct investment. Perhaps even more pertinent is the fact that just a few months from now, Africa’s single market will commence, and it is to be administered from Accra.

Surely a dispute over competition from neighbouring African retailers will not be the best measure of Ghana’s commitment to fast evolving economic integration.