Ghana bans import of certain goods from Nigeria
The economies are two of the largest in West Africa. Largest (Nigeria) and second-largest (Ghana) to put it more simply. Combined, the countries account for about 61 percent of the population and 68% of the GDP in the ECOWAS region. The economies have another thing in common. Nigeria and Ghana are the biggest producers of oil in West Africa.
Trade relations between Nigeria and Ghana is key. Almost 10% of Ghana’s trade volume is accounted for by Nigeria. Nigeria, on the other hand, named Ghana as its 9th largest trading partner. Despite being a big producer of oil, Ghana imports the lion’s share of Nigerian oil exports in West Africa. The countries have emerged as dependable allies at international, regional and sub-regional levels.
But all does not seem to be well between the countries. It seems like the trade war between the nations has entered a new phase this year. Ghana has now prohibited the import of several goods from Nigeria and other countries such as crude oil, cement and pharmaceuticals.
Ghana trade authorities cited unfair trade practices between the two nations as the key reason behind this drastic step. Many however believe Ghana is retaliating as the nation has been Nigeria’s “import prohibition list. Nigeria claims this move is a part of measures to control foreign exchange and manage the country’s reserves.
Ghana’s move might prove detrimental to Nigeria. The nation is already struggling to revive the fast-falling value of the Naira, enhance exports of crude oil, and cocoa amongst others. So for an already vulnerable Nigeria, Ghana ban is definitely not a welcome news.
We look at how the trade ban could impact Nigeria:
Like mentioned previously, Ghana is Nigeria’s No. 1 trade partner as it the largest importer of Nigerian oil in West Africa. So while Nigeria enjoyed robust foreign trade with Ghana, most of the Nigerian oil companies are likely to have to deal with low earnings.
Also, ever since oil was discovered by Kosmos Energy in 20017, Ghana was keen on harnessing its natural resources. The nation, as of today, boasts of 25 new oil discoveries which can produce about 250 million metric standard cubic feet of gas per day and more than 190,000 barrels of oil on a daily basis in about five years from now. So the dependence on Nigerian crude oil will decrease significantly.
To better compete with Nigeria in the global market the Ghana government has outlining strategies to best use its natural resources and become self-dependent. While it looks like the scales are tipped in favour of Ghana, it’s crucial that the nation and Nigeria simplify trade procedures and undertake diligent reviews of existing laws and taxes to make sure products meet national standards.
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