Counter-arguments: Against the Liberalization of Ghana’s Retail Sector

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Counterarguments:   Against Liberalizing Ghana’s Retail Sector

The new GIPC CEO Yofi Grant recently granted an interview to the Citibusiness News Daily and he mentioned the fact that his outfit will stop enforcing the protectionist policies afforded Ghanaian traders by previous governments.   There was a very good reason why this protection was put in place.

After thoroughly reviewing his submissions during that interview, it became quite clear to me that, the he perhaps needs to apprise himself of a few key fundamentals of Trade.  Especially in the areas of International Trade, Balance of Trade, Welfare Effect of Trade, Trade based Dumping and its causative factors, youth employment, etc.  It also seems that, he is even unaware that the G7 nations, are also the most protective.  Trade creates wealth, and wealth, creates Power!

Listed below are my complete responses to his submissions.  As usual, let me know your thoughts.

Cheers!!

 

Details of the interview:

[1]  Complete withdrawal of the policy:  The Chief Executive Officer of the Ghana Investment Promotion Center (GIPC), Yofi Grant has stated strongly that the center will no longer reserve the retail sector of the economy for Ghanaians alone.

My response:  Can the Honorable CEO of GIPC confirm for us, whether he ever read the original policy regarding this matter?  If so my questions for him are as follows:

  1. Size of the sector: What was the size of the local retail sector then versus now?
  2. Target beneficiaries: Who were the target beneficiaries of this policy and how has the demographic changed since the enactment and implementation of this policy.
  3. Incomes: How has the incomes of the target audience for this policy changed during the period?

By the time he is done answering these questions, I’m pretty confident that he will have a change of mind.  Unless of course, witchcraft is real.
[2]  Sector sentiments:  He maintains that the practice has constrained most business owners in the sector who fear competition from growing and expanding their operations into global companies.

My response:  Of this sectoral sentiment that the CEO of GIPC speaks of, does he have any empirical sector based surveys or related data to back it??  Because it’s counter-logical and counterintuitive.  How would the people being protected and supported by the government, be scared of growing and expanding?  Is Nduom scared of growing and expanding their operations into global companies.  The evidence doesn’t support his argument.

[3]  Speaking to journalists after a ceremony held by the Dubai Chamber of Commerce and Industry, Mr. Grant stated that it is demeaning to reserve the unprofitable areas of the economy to Ghanaians while investors are welcomed to control the real sectors that generate incomes and create jobs.

My response:  Demeaning to who??  Is Yofi not aware that the G7 nations are the most protectionist in the whole world??  Perhaps he has a steep International Trade learning curve to climb ahead of him.  The wealthiest nations in the world are also the most protectionist economies.

 

[4]  “If we rather create incentives for our people to develop they will go far instead of protecting them, because protectionism when there is no capital to develop means you are not going to go anywhere. Even right now as the law exist foreigners flood our retail sector. How many things do we manufacture in Ghana,” he quizzed.

My response:  What specific incentives is Yofi referring to?  While I agree with Yofi that protectionism alone without some kind of substantive capital investment support policy from the government is not the best approach.  However Neo-liberal and intellectually lightweight approaches to Trade policy formulation is rather dangerous to our nations wellbeing.  Does he have any specific plans in mind that public advocates can begin to critically analyze at this time??

[5]  Mr. Grant was of the view that it is demeaning to reserve activities such as “buying and selling”, taxi driving, and petty retail jobs for Ghanaians while the country sets high limits for foreigners to control  and takeover the critical sectors of the economy.

My response:  Is the Ghanaian government banning citizens from sectors that Mr. Grant describes as “critical sectors of the economy”.  It is that lack of strategic national policies that has resulted in the takeover of all the nations critical sectors by foreigners and not lack of intelligence or competence on the part of Ghanaians.  In fact, if he learned a little bit more history, he would have realized that the seeds for these takeovers were sowed by non-other than the progenitors of his own party. The UGCC-PP-NPP.

 

[6]  He maintained that government will rather create incentives for business owners to grow and become global competitors.

My response:  What specific incentives is he referring to?  Which forms will they take?  Subsidies, loans, specifics will be helpful.

 

[7]  He argued that the country cannot rely on the current status quo to always import and sell in the retail sector.

My response:  I totally agree with the GIPC CEO.  The nation needs a paradigm shift very badly.  But it is also important to note that a shift, just for the sake of it, could be rather ruinous to the collective welfare of the nation.

 

[8]  “All the people who are trading stuff in the market, where are the goods coming from, they are foreign, they are not Ghanaian made. What I am saying is that we should take the opportunity to manufacture,” he said.

My response:  So how can how can Yofi suggest that he is going to open the sector to foreigners, which will inevitably result in dumping, and yet still, in his own words ” we should take the opportunity to manufacture”.  Doesn’t he realize that this suggestion constitutes an oxymoronic intellection??  At least, from an international trade perspective.  And also from and practical and theoretical point of view?

 

[9]  “You can start by learning from your partners. When you bring the investment to actually manufacture here, we have a better chance of Ghanaians learning to manufacture than if you always have to go out there and buy the goods, bring them here and come trade them. We hardly manufacture anything but we have the resources to start some manufacturing to add value to our products,” he stressed.

My response:  With this argument, Yofi seems to be making some kind of Knowledge Transfer and Value chain re-engineering or development.  Maybe Yofi will do himself and us a favor to find out why his party failed so badly the last time around.

 

[10]  Mr. Grant made the statements during a meeting with the Dubai Chamber of Commerce and industry in Accra to exchange investment ideas and also encourage investors from Dubai to move into Ghana. The Dubai Chamber was led by the Director, Omar Abdulaziz Khan.

My response:  Just a bit of free knowledge for Yofi, Ghana’s trade relationship with Dubai is one of the few net-neutral trade relationships that we have.  Which means that they done sell more to us than we sell to them.  Hopefully on Yofi’s watch, Ghana’s share of this trade relationship will actually grow and not shrink.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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About Anang Tawiah

About the author :: Anang Tawiah is a New York City based Management Consultant specializing in Investment Risk and Technology Strategy. He continues to guide many Blue chip companies and Governments as a Business and Technology Consultant. Please direct all follow up questions, concerns, request for speaking engagements and presentations regarding my articles and research to my Facebook Page listed below. You can read more of his analysis or reach him for further professional consultations and or guidance at: // Email: anang@labaddi.com // Follow me on Wordpress: www.anangtawiah.com // Follow me on Facebook: www.facebook.com/AnangTawiah

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