Cautious trade between Ghana and Nigeria

Ghanaians have mixed feelings about the growing numbers of Nigerians doing business among them.

In spite of their proximity and shared experience of British colonial rule, relations between the two countries have a chequered history. The lowest point was the forced exodus of hundreds of thousands of Ghanaians who sought employment in Nigeria during Ghana’s calamitous 1970s, only to be expelled when Nigeria’s own problems started to grow.

After a decade of sustained economic growth on the back of soaring commodity prices, traffic is growing in both directions, with the balance of trade and people now tilted in favour of Nigeria, which has a population of 150m compared with Ghana’s 24m.

But the promise that Nigeria might take off, and lift much of the region with it, is still largely unfulfilled. Formal relations are not as warm as they might be, with Ghanaians fearful of being swamped by their larger neighbour, at a time when traders are also facing fierce competition from Chinese and other migrants.

Nigerians, on the other hand, tend to be frustrated by the relatively cool embrace with which they are greeted by officialdom in Accra. The current Ghana government tries to enforce minimum start-up capital of at least $50,000 for Nigerian businesses to control the influx.

Nevertheless, Nigerian traders and business people are drawn to Ghana for its relative security, more reliable power supply and schools, as well as the opportunity to expand businesses on a regional scale from a country with a shared language.

The movement has seen trade between the two countries expand in recent years to more than $2.6bn – but since much of this is in the informal sector, there are few accurate statistics. It has been led partly by Nigerian banks, flush with petrodollars and with regional ambitions. Insurance companies are following.

The west Africa gas pipeline, decades in the making but now distributing energy along the coast, and oil supplies from the Niger delta to the Tema refinery in Ghana, make up the big numbers. Indigenous Nigerian oil companies have won exploration licences since Ghana discovered oil in commercial quantities in 2007.

But there has also been an influx of smaller businesses, from software companies and industrial cleaning outfits to traders seeking to catch goods arriving in Ghana on their first stop along the west Africa coast.

Moving to Ghana is, in part, a lifestyle choice, says Aloy Chife, a Nigerian who returned to the region after working for Apple and Enron in the US. Socketworks, his company, provides software to governments and education institutions, and is headquartered in Accra but with the bulk of the business in Nigeria.

The flight from Accra to Nigeria’s commercial capital, Lagos, is 40 minutes, or one hour and 20 minutes to Abuja, the capital, so to all intents and purposes, Mr Chife says, it is no more inconvenient than living in a far-flung part of Nigeria in terms of distance. In other respects it has advantages – cheaper housing, more reliable power, better schools and a much lower crime rate.

Ghana might have become a manufacturing base exporting to Nigeria’s much larger market, where electricity shortages drive up costs. Some companies have tried this but with limited success.

“The advantage you gain in the power supply you lose in transport,” says Peter Bamkole, who lectures in small and medium-sized enterprises at the Lagos business school. “With customs and bribery along the way, this is a big battle.”

The drive for greater integration and opportunities along the west African coast will come not so much from governments, he believes, as from financial and other infrastructure provided by the private sector.

“It is not the politics,” he says. “It is not the African Union or even Ecowas [the regional trade bloc]. But once we have a proper [integrated] financial platform, business people will be seeing opportunities in all these countries in the region.” The political will is likely to follow, he says.