President of the Ghana Union of Traders Association (GUTA), Dr. Joseph Obeng has expressed concern about the increasing presence of Chinese retail businesses in Ghana and has called for amendments to the country’s labor laws in response.
He highlighted that local businesses have lost approximately 40 percent of the market share to Chinese businesses.
Additionally, he noted that while local businesses only import 20 percent of goods, foreign companies, particularly Chinese businesses, import 80 percent.
Dr. Obeng made these remarks during an appearance on TV3’s Hot Issues program on Sunday, May 26.
“Now our major problem is with the Chinese and we are going to go on them seriously. The Chinatown and China Mall, these Chinese companies here and all that are taking a chunk of our business over 40%,” he said.
He attributed the rapid depreciation of the local currency to the presence of foreign businesses with significant capital importing large quantities of goods, which has a detrimental effect on the competitiveness of local traders.
“That is why we tell government that the forex issue, the depreciation of the cedi can be attributed to these group of people because they do not bring the correspondent fund of capital to Ghana.”
He also proposed that Chinese businesses should be required to bring their capital into Ghana to meet a certain threshold before being allowed to import goods.
This, he argued, would ensure that the businesses are genuinely invested in the Ghanaian economy and not just operating as extensions of their parent companies in China.
Dr. Obeng also rejected the notion that local businesses overprice their goods, forcing customers to opt for Chinese businesses.
“That is what you normally say but it is psychological because you know that we go to China to buy the goods and so once they’re here to make their supermarket and wholesales and all that then you think that your are also going to China [Mall] to buy your goods. The consumer, but they are taking advantage of you, they are not serving you quality even the price is not that low that you think and yet psychologically they all troop to the China Mall, Chinatown, go there and see the cars.
“And now they even trade on Sundays, they are taking it all,” he lamented.
If Ghanaian companies are forced to downsize or close due to competition from Chinese businesses, it could lead to job losses for local workers.
Ghana’s laws on foreign businesses in the country
The Ghana Investment Promotion Centre Act, 2013 (Act 865) stipulates that a person who is not a citizen may engage in a trading enterprise if that person invests in the enterprise, not less than One Million United States Dollars in cash or goods and services relevant to the investments.
Section 28(3) of Act 865 further provides that “trading” includes the purchasing and selling of imported goods and services. A further condition imposed on foreign enterprises that intend to engage in trading by Section 28(4) is that such an enterprise must employ at least twenty (20) skilled Ghanaians.
Section 27(1) of Act 865 generally lays out activities that foreign investors are not permitted to invest or participate in. This list is not exclusive. Other laws have provisions on activities reserved for Ghanaians. These activities include 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. Other activities not permitted for non-citizens include:
• the operation of taxi or car hire service in an enterprise that has a fleet of less than twenty-five vehicles
• the operation of a beauty salon or a barber shop
• the printing of recharge scratch cards for the use of subscribers of telecommunication services
• the production of exercise books and other basic stationery
• the retail of finished pharmaceutical products
• the production, and retail of sachet water
Meanwhile, a breach of these laws is punishable offenses.
Section 40 of Act 865 provides for a list of offenses. A person commits an offence under Act 865 if the person among others, lets out a stall or store in a market to a foreigner; or otherwise contravenes a provision of this Act.
The effect of this provision is that a person who is not a citizen of Ghana who engages in retail trade without meeting the minimum capital requirements set out in Section 28 of Act 865 commits an offence under Act 865. Ghanaians or non-Ghanaians who let out a stall or a store in a market to a foreigner also commit a breach of Act 865.