Regulatory Framework and Business Environment in Trade

All foreigners investing in trade are barred from the “sale of anything whatsoever in a market, petty trading, hawking or selling from a kiosk at any place” by the Ghana Investment Act (1994), which reserves these economic activities for Ghanaians. This stipulation is usually interpreted as banning foreigners from engaging in retail selling. Chinese merchants today therefore limit their activities to import and wholesale, or at least they present their practices as such. When we began researching, the Ghana Companies Code (1963) required foreign-invested wholesale companies to prove an investment of at least USD300,000 (deposited in a local bank account or in commodities of equivalent value) and, in theory, to create jobs for at least ten Ghanaians. The investment floor was later raised to USD1 million. Once the foreign investor has fulfilled these minimum legal requirements, the company is entitled to two working visas (more if the registered investment is higher). As a rule of thumb, Chinese entrepreneurs who intended to set up a wholesale business in Ghana during the period of our research needed between USD0.5 million and USD1 million as initial capital. In addition to the legal requirements, shop and warehouse spaces had to be rented for five to ten years at a rent of USD25,000-USD60,000 each, payable in advance (Gan, February 17,2011; Lian, December 20,2011; Luo, February 4,2011; Shen, February 4, 2011). Housing, a car, maybe a van or truck for delivering goods and—last but not least—commodities accounted for the rest.

A comparison of the number of Chinese trading firms clearly visible in the central market area of Accra in early 2011 with the total of 147 such businesses accounted for in Ghanaian official statistics in the period 1994-2010 (GIPC 2011) suggests that Chinese entrepreneurs are reluctant to comply with the requirement to register with the Ghana Investment Promotion Centre and that the official records are not to be trusted. The unreliability ofthe data reflects a general problem regarding estimates ofthe number of Chinese in Ghana.

 
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