1. Introduction: Beyond the Emotions of Xenophobia

I have been trying to wrap my head around the recent wave of alleged xenophobic attacks and rising economic nationalism in South Africa, particularly the growing hostility toward Ghanaian traders and small business owners operating within the informal economy.

In attempting to understand the underlying frustrations driving these tensions, I came across a viral video in which a South African woman confronts a Ghanaian small-business operator, warning him and explaining why many South Africans believe that African foreign nationals should return to their home countries. While parts of her comments were emotionally charged and carried troubling undertones, some of the issues she raised point to a deeper, more strategic economic conversation that Ghana must urgently engage in.

In the video, she remarked:

“You cannot have a situation where Ghanaians are [here] doing all the [informal] work. You are the largest producer of gold, but Ghanaians are here doing nails and hair business. They’ve left all the important resources back home.”

She further argued that South Africans were becoming “spectators in their own land” while foreign nationals increasingly occupied township and informal trading spaces. At the same time, she distinguished between small informal businesses and large-scale investments, pointing to companies such as MTN, Standard Bank and DSTV operating in Ghana and employing thousands of Ghanaians.

Whether one agrees with her tone or not, the central question raised is one Ghana cannot afford to ignore:

Why do many Ghanaian businesses remain small, informal and unable to scale into globally competitive enterprises?

This is the more strategic conversation we need to have, rather than becoming consumed solely by the emotional dimensions of xenophobic tensions in South Africa. Indeed, this concern has been raised before in discussions about why Ghanaian businesses struggle to expand internationally and why Ghana has not produced enough globally dominant indigenous firms capable of competing across Africa.

2. The South African Argument: Economic Nationalism and Informal Trade

The confrontation reflects a growing wave of economic nationalism emerging in parts of Africa, particularly in contexts where unemployment, inequality and economic frustrations remain high. The South African woman repeatedly emphasised that their frustrations were not primarily directed at multinational investors because, in her words, such firms “employ our people” and “contribute to the economy.”

She argued:

“South Africa has DSTV there in Ghana. They've employed qualified, educated Ghanaians. They are contributing to your economy. They are not taking away businesses. They are not selling on the streets…. we are also pleading with Ghanaians all over, Africans in general all over, to go back to their respective countries and fix them”.

Her distinction between informal foreign traders and multinational investors may be controversial, but it reflects an uncomfortable reality about how global business legitimacy is often perceived. Countries tend to respect businesses that enter foreign markets as large-scale investors, employers and infrastructure builders, not merely as participants in already congested informal sectors.

In her view, companies such as MTN, Standard Bank and DSTV operating in Ghana are accepted because they employ locals, contribute taxes and participate in formal economic structures. By contrast, she argued that many African migrants arrive in South Africa not as investors creating large-scale enterprises, but as participants in highly competitive informal trading spaces already under pressure from unemployment and poverty.

None of this justifies xenophobia, intimidation or threats against foreign nationals. Violence and exclusion cannot be defended under any circumstances. However, dismissing the entire conversation as mere xenophobia without interrogating the underlying economic frustrations would also be intellectually dishonest.

3. The Bigger Question: Why Do Ghanaian Businesses Struggle to Scale?

The more uncomfortable but necessary question is why many Ghanaian businesses remain small, fragmented and informal despite Ghana’s abundant human and natural resources.

Why has Ghana, despite its entrepreneurial energy, struggled to produce enough indigenous multinational firms capable of competing across Africa? Why do many Ghanaian enterprises remain trapped within survivalist and micro-scale operations while businesses from other countries are increasingly dominating regional markets?

These questions become even more important when viewed against the backdrop of Ghana’s natural wealth. Ghana remains one of Africa’s largest gold producers, yet many of its citizens continue to seek economic survival abroad through informal work and small trading activities.

The issue, therefore, is not simply migration. It is about the structural conditions that make large-scale enterprise development difficult within Ghana itself.

4. The Structural Constraints Facing Ghanaian Businesses

1. High Cost of Doing Business

One of the biggest issues is the high cost of doing business in Ghana and the volatility of the business environment. For many young entrepreneurs, even entering the informal sector is expensive. A small trader may be required to pay several years of rent advance before securing a modest operating space. In many urban areas, a trader can spend thousands of cedis upfront simply to acquire a small shop.

Such conditions make it extremely difficult for start-ups to survive, let alone scale.

• Access to Credit and High Interest Rates

Access to credit presents another major challenge. Traditional banks require collateral, audited accounts, employment history and formal documentation that many small businesses simply do not possess.

Even where financing is available, interest rates are often prohibitively high. Informal lenders and microfinance institutions may offer convenience, but usually under repayment terms that place unbearable pressure on already fragile cash flows.

As a result, many entrepreneurs spend more time surviving debt obligations than building sustainable businesses.

• Weak Governance and Management Systems

Equally important is the issue of business management capacity. Many small businesses lack structured governance systems, accounting standards, auditing practices and professional management frameworks that make firms attractive to investors and capable of long-term expansion.

Without these systems, businesses often remain personality-driven survival ventures rather than scalable enterprises.

• Weak Strategic Partnerships and Digital Integration

There is also a weak culture of strategic partnerships within Ghana’s entrepreneurial ecosystem. Many businesses still operate almost entirely in cash, with limited adoption of digital payment systems, formal banking relationships or scalable operational systems.

Furthermore, there remains a tendency among many entrepreneurs to prioritize complete ownership of a very small business rather than partial ownership in a larger, more scalable enterprise. Too many prefer owning 100% of a struggling small shop over owning 10% of a fast-growing company with regional potential.

5. The “Flight Mentality” and the Social Prestige of Migration

Beyond economics lies a deeper social issue: the cultural glorification of migration.

In Ghana, travelling abroad is often associated with prestige, social mobility and success, regardless of the actual living conditions abroad.

The “flight mentality” which is the belief that one’s breakthrough begins only after boarding a plane, has weakened confidence in building sustainable opportunities locally.

This partly explains why Ghanaians are visible across the Middle East, Europe and other African countries, often pursuing uncertain livelihoods while opportunities for domestic enterprise development remain underexplored.

Too often, success in Ghana is socially measured by one’s ability to leave the country rather than by one’s ability to build sustainable value within it. This weakens local ambition, drains entrepreneurial talent and reinforces dependency on foreign economies.

6. From Survival Businesses to Continental Champions

This means our entrepreneurial discourse must become more serious than it currently is. We must move beyond sentimental debates about wealth, elite social clubs and performative displays of affluence toward a national conversation about how Ghanaian businesses can become continental and global competitors.

The real aspiration should not merely be to celebrate wealthy individuals in East Legon or members of elite golf clubs. The bigger ambition should be producing Ghanaian-owned firms that become the next MTN, Shoprite, UBA, Zenith Bank or DSTV. These are companies capable of expanding across borders, employing thousands and shaping economies beyond Ghana.

That is what commands entrepreneurial respect and economic dignity in the modern global economy.

Africa’s long-term competitiveness will depend not merely on resource ownership, but on whether African countries can build enterprises strong enough to shape markets across borders and participate meaningfully in global economic systems.

7. What Must Change: Policy and Entrepreneurial Reforms

The solutions to these challenges must go beyond motivational speeches about entrepreneurship and instead focus on deliberate structural reforms that make business growth realistic for ordinary Ghanaians.

1. Reforming Commercial Rent Systems

Ghana must urgently address the extremely high cost of starting and operating small businesses. The practice where entrepreneurs are required to pay several years of rent advance before accessing small commercial spaces is economically destructive to start-ups.

Government and city authorities must work with private developers, local assemblies and financial institutions to establish affordable commercial hubs and flexible rental systems for young entrepreneurs and informal traders. A business environment where entrepreneurs exhaust their capital on rent before operations even begin cannot produce globally competitive firms.

• Expanding Access to Affordable Capital

Access to capital must be radically restructured. The current lending architecture largely excludes informal and small businesses because many lack collateral, audited accounts and formal documentation. Yet these are the very businesses that dominate Ghana’s entrepreneurial ecosystem.

Financial institutions, development banks and government-backed enterprise schemes must develop alternative credit assessment systems that recognize transaction histories, mobile money records, inventory flows and digital payment activity as indicators of business viability.

More importantly, interest rates on small business loans must become growth-oriented rather than profit-maximizing to the point of suffocating businesses before they mature.

• Building Management and Governance Capacity

Ghana needs a national small business transformation agenda focused on managerial and governance capacity. Many small businesses fail to scale not because their products are poor, but because they lack systems.

Entrepreneurs need structured education in financial management, taxation, corporate governance, accounting standards, branding, customer management, digital commerce and investment readiness. If Ghanaian businesses are to attract investors and expand beyond survivalist operations, they must transition from personality-driven enterprises into professionally managed institutions.

• Strengthening Digital and Strategic Business Ecosystems

Another critical issue is the need to build stronger strategic partnerships within the entrepreneurial ecosystem. Small businesses should be encouraged and incentivized to integrate with banks, fintech companies, logistics providers, digital payment systems and e-commerce platforms.

It is deeply concerning that many businesses still operate entirely in cash with limited digital records, making expansion, financing and investor confidence difficult. A digitally integrated small business ecosystem would improve transparency, tax compliance, financial inclusion and scalability.

• Changing Entrepreneurial Culture and Ownership Mindsets

Equally important is a cultural shift in how Ghanaians think about ownership and growth. Too many entrepreneurs prefer owning 100% of a struggling microbusiness rather than sharing ownership in a larger and scalable enterprise.

Ghana’s business culture must begin to appreciate partnerships, equity financing and collective enterprise-building. No globally competitive company was built solely on the logic of individual ownership and informality.

• Reframing National Attitudes Toward Migration

There is also the urgent need to confront the societal glorification of migration. Ghana must intentionally build a national narrative that celebrates innovation, enterprise creation and local economic transformation with the same enthusiasm currently attached to travelling abroad.

The country must begin to celebrate business builders, innovators and industrialists with the same prestige often associated with migration and foreign residency.

• Supporting Regional Expansion of Ghanaian Businesses

Finally, Ghana must deliberately pursue policies that help local businesses expand beyond national borders. The conversation should not only be about reducing unemployment, but about building Ghanaian multinational firms capable of competing across Africa.

We should be asking how Ghanaian enterprises can become the next MTN, Shoprite, Zenith Bank or DSTV. These are businesses that create jobs, shape regional economies and command global respect.

8. Conclusion

The uncomfortable truth raised by the South African confrontation is not simply about xenophobia. It is also about economic positioning, business competitiveness and the kind of entrepreneurial culture African countries are building.

Ghana’s long-term dignity and influence on the continent will not be determined merely by its natural resources, but by its ability to produce businesses powerful enough to expand beyond its borders and shape markets across Africa and the world.

Africa’s future influence will depend not only on political rhetoric or natural resource wealth, but on whether African countries can build globally competitive businesses capable of creating jobs, driving innovation and transforming economies across borders.

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Dr. Reginald Arthur is a Lecturer / Director of Graduate & Executive Education, Faculty of Business Administration and Communication Arts at Academic City University