Xenophobia or entrepreneurial wake-up call?

I have been trying to make sense of 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 frustrations behind these tensions, I came across a viral video in which a South African woman confronts a Ghanaian small business operator. While parts of her comments were emotionally charged and deeply uncomfortable, they raised a question that Ghana cannot afford to ignore.

“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 remarked. She further argued that South Africans were becoming “spectators in their own land” while foreign nationals increasingly occupied township and informal trading spaces.

Whether one agrees with her views or not, her comments point to a deeper economic question: Why do so many Ghanaian businesses remain small, informal and unable to scale into competitive enterprises that can expand across Africa?

Conversation

This is the conversation we need to have.

The issue is not simply about xenophobia. It is also about entrepreneurship, economic competitiveness and the structural barriers that prevent Ghanaian businesses from growing beyond survival.

The South African woman repeatedly distinguished between informal traders and large-scale investors.

She pointed to companies, such as MTN, Standard Bank and DSTV, arguing that they are welcomed because they employ local people, contribute to the economy and operate within formal business structures. 

Her distinction may be controversial, but it reflects an uncomfortable reality about how economic legitimacy is often perceived.

Countries tend to respect businesses that enter their markets as investors, employers and builders of infrastructure, rather than as participants in already congested informal sectors.

None of this justifies xenophobia or intimidation.

Violence against foreign nationals cannot be defended under any circumstances.

Yet, dismissing the entire conversation as mere prejudice without examining the underlying economic frustrations would also be intellectually dishonest.

The more uncomfortable question is why many Ghanaian businesses remain trapped in micro-scale operations despite the country's entrepreneurial energy and natural wealth.

Ghana remains one of Africa’s leading producers of gold, yet many of its citizens continue to seek economic survival abroad through informal work and small trading activities.

Answer

Part of the answer lies in the high cost of doing business. For many young entrepreneurs, even entering the informal sector is expensive.

Securing a modest commercial space often requires several years of rent in advance, consuming scarce capital before business operations even begin. Such conditions make it difficult not only to survive but to grow.

Access to finance presents another challenge.

Many small businesses lack the collateral, audited accounts and documentation required by traditional lenders. 

Even where financing is available, interest rates are often prohibitively high.

As a result, many entrepreneurs spend more time managing debt obligations than building sustainable enterprises.

Equally important is the issue of business management capacity.

Many enterprises operate without structured governance systems, proper accounting practices or strategic growth plans.

Without these foundations, businesses often remain personality-driven ventures rather than institutions capable of attracting investment and expanding beyond local markets.

There is also a weak culture of strategic partnerships.

Too many entrepreneurs prefer owning 100 per cent of a struggling small business rather than sharing ownership in a larger enterprise with growth potential. 

Beyond economics lies a deeper social challenge: the cultural glorification of migration. In Ghana, travelling abroad is often associated with prestige and success, regardless of the actual realities of life overseas. 
The belief that prosperity begins only after boarding a plane has weakened confidence in building opportunities locally.

Too often, success is measured by one's ability to leave Ghana rather than by one's ability to create value within it.

This mindset has consequences.

It encourages the export of entrepreneurial talent while reducing the urgency of building strong domestic enterprises capable of competing regionally and globally.

What, then, must change?

The answer lies in deliberate reforms that make business growth realistic for ordinary Ghanaians.

The cost of commercial space must be reduced, particularly the practice of demanding years of rent in advance. 

Access to finance must be expanded through innovative and affordable lending models.

Small businesses must also be supported with training in governance, accounting, branding and strategic management.

At the same time, Ghana must foster a business culture that values partnerships, professionalisation and long-term growth.

More importantly, we must shift our national aspirations from celebrating migration to celebrating enterprise creation, innovation and industrial transformation.

Ultimately, the real ambition should not simply be to produce more successful traders.

It should be to build Ghanaian companies capable of becoming the next MTN, Zenith Bank,

Shoprite or DSTV, expanding across borders, creating jobs at scale and shaping economies beyond home countries.

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

Ghana’s long-term influence will not be determined solely by its natural resources, but by its ability to produce businesses strong enough to compete across borders and shape markets throughout Africa.

Academic City University, 
Accra, Ghana.