Foreign Traders Circumvent Ghana’s Laws Through Fronting Threatening Indigenous Businesses

Foreign nationals are increasingly flouting Ghana’s investment and trade laws by using local associates as business fronts enabling them to dominate sectors legally reserved for indigenous citizens. This practice, known as fronting has become widespread with foreign traders now reportedly controlling up to 60% of local commerce.
Under Ghana’s current laws specifically Section 27(1) of the Ghana Investment Promotion Centre (GIPC) Act, 2013 (Act 865) foreigners are prohibited from engaging in petty trading and other small-scale commercial activities reserved for Ghanaians. However many foreign nationals sidestep these restrictions by registering businesses under Ghanaian names while retaining full control of operations behind the scenes.
According to Louis Yaw Afful, an international trade expert and consultant for the African Continental Free Trade Area (AfCFTA) a major factor enabling this circumvention is the lack of coordination between key regulatory bodies. While the GIPC is tasked with overseeing foreign investments the Ministry of Trade regulates retail activities creating enforcement gaps that foreign traders exploit with ease.
Most of the time, these agencies operate in silos, Afful explained. This gap has enabled foreign traders, often using Ghanaian associates as fronts to operate in sectors legally reserved for natives.
The result is a system that allows foreign merchants to engage in retail trade, local transportation and other neighborhood businesses that Ghana’s lawmakers had intended to protect for local entrepreneurs.
The issue has sparked growing anger among local traders and associations, particularly in major commercial hubs like Abossey Okai. The Ghana Union of Traders Association (GUTA) and the Abossey Okai Spare Parts Dealers Association have issued ultimatums demanding that foreign retailers vacate reserved sectors.
These tensions recently boiled over, with several foreign-owned shops mainly operated by Nigerian nationals shutting down after confrontations and warnings. A fresh 14-day deadline has since been issued, further intensifying the standoff.
GUTA President Joseph Obeng has warned that weak enforcement of investment laws is pushing indigenous businesses to the brink. “Our members are losing their livelihoods while foreign traders continue to operate freely in violation of the law, Obeng said.
In addition to undermining local businesses, fronting has serious implications for government revenue. Many of these proxy-run businesses operate informally or under-report income, leading to significant tax losses and uncollected licensing fees.
Afful noted that enforcement mechanisms are currently too weak to effectively detect or prevent these practices. Limited collaboration among the Registrar-General’s Department, GIPC, Ghana Revenue Authority, and local government agencies has created oversight blind spots that foreign traders exploit.
Relief may be on the horizon through a proposed amendment to the GIPC Act, currently awaiting parliamentary approval. The new bill aims to provide clearer definitions of protected sectors, establish stronger penalties for violations, and empower enforcement agencies to take decisive action.
Once passed, the amendment will provide the legal teeth needed to enforce the rules and prevent foreigners from bypassing restrictions through Ghanaian fronts Afful stated.
He recommends immediate reforms such as:
Coordinated inspections by all relevant agencies
Regular stakeholder engagements between regulators and trader associations
Public education campaigns to clarify laws and reserved sectors
Balancing Trade Commitments and Local Protection
The enforcement challenge comes at a critical time, as Ghana works to honor its commitments under the African Continental Free Trade Agreement (AfCFTA). While the country seeks to attract investment and boost trade, there is a growing need to safeguard opportunities for indigenous entrepreneurs.
Afful emphasized that without urgent action, sectors meant to uplift Ghanaian traders could be overtaken permanently by foreign actors who exploit regulatory loopholes.
The proxy business model is a direct threat to Ghana’s economic sovereignty, he concluded. It demands a united, strategic response to preserve the integrity of local enterprise.”