Signs That Trade Tensions with Nigeria Could Soon Be Easing

There are some signs that business leaders and politicians are keen for Nigeria and Ghana to increase their trading with each other. What moves have been made in this respect and what could it mean for the economy in Ghana?

Background to the Tensions

The Ghanaian economy has traditionally been based on its abundance of natural resources.  Trading some of these resources with oil-rich Nigeria may seem like a natural approach. Indeed, in the last few years, the countries have increasingly traded with each other.

While the unofficial nature of much of this cross-border business makes it difficult to obtain exact numbers, it’s thought that Ghana exported some $178 million of goods to its near-neighbor. This was made up of items such as chocolate, rubber footwear, and palm oil. This represented the latest increase in a trend that has seen exports to Nigeria grow at an annualized 11.1% since the late-1990s.

However, the situation changed drastically in 2019, when Nigeria decided to partially close its borders with Benin, Cameroon, and Niger. This blocked the export route for many Ghanaian businesses and caused the level of experts to Nigeria to drop drastically.

The Recent Signs

While nothing has officially changed since then, recent comments suggest that trade between these two countries could soon move up a level. Rashid Bawa is the Ghana High Commissioner to Nigeria, and he recently suggested that the Government in Ghana is ready to work with their Nigerian counterparts to permit the sustainable development of both countries.

Bawa’s comments came at the 2022 forum for the Ghana Nigeria Business Council (GNBC), which was held in Lagos. He pointed out that the private sectors of both countries have been sustaining their relationships and that both Ghana and Nigeria were the main economies in the region.

In addition, Bawa pointed out that the Ministers of Trade for both countries signed an agreement at the end of 2021 that puts in place the framework needed to allow exports and imports to grow. Among the solutions suggested by businesspeople at the GNBC were ideas such as subsidizing airborne exports and making foreign currencies readily available for traders.

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What Could a Better Trade Relationship Mean?

There is little doubt that improved trade relations between Ghana and Nigeria could prove to be beneficial to both countries. Opening up a new market for Ghana’s resources and allowing Nigeria to export their manufactured goods could help both of them to continue developing.

One issue related to imports and exports worth considering is the value of the national currency. In forex trading, traders speculate on the impact of world events on currency pairs like EUR/USD and GBP/USD. If Ghana exports more than it imports, this would lead to a greater demand for the cedi, potentially causing its value to increase. This is one of the factors that politicians need to take into account when looking for a way forward in international relations.

Currently, Ghana’s main exports partners include the UK, the Netherlands, and South Africa. Cocoa beans, gold, and timber are among the key products they transport aboard. By adding Nigeria to this list, producers in Ghana would enjoy greater possibilities for growth.

The signs are promising, with politicians and businesses seemingly keen to see Ghana and Nigeria start trading with each other more frequently. 2022 could prove to be a key year in getting their relationship back on track for everyone’s benefit.