A new diplomatic dialogue after the SA-Nigeria row

2012-03-17 09:00

How have trade relations between both countries been affected by the yellow fever tit for tat deportations row?
Trade relations have not been affected directly. Business continues to take place despite threats by the Nigerian foreign minister to ‘clamp down’ on South African companies.

Many South Africans travel to Nigeria on business dealings. Contracts in the oilfields, for example, and ongoing projects and their non-arrival may have caused some problems.

Hopefully, there is no long-term damage, although there may be instances of South Africans being treated with a little less friendliness than before for a while until the dust settles.

How have South African businesses operating in Nigeria been impacted by the spat?

I doubt there have been issues here of any consequence. Most companies have well-entrenched relationships with local partners, clients and customers, who are not likely to let these be affected by what is in essence a diplomatic spat at a government-to-government level.

But the success of many South African companies in Nigeria is often viewed with resentment as there is a perception that profits are simply shipped back to South Africa without real benefits to the local economy.

However, I don’t believe this is the case. South African companies have played a pivotal role in the rebuilding of Nigeria.

South African businesses have also provided significant training and employment opportunities, and contributed to the national fiscus and local development. Companies have also reinvested heavily in their Nigerian operations.
MTN is spending $1 billion (R7.6 billion) this year on expanding capacity, in addition to several billion dollars over the past few years. SABMiller is spending $100 million on a second brewery in Nigeria, and retailers and property developers have at least a dozen projects in the pipeline right now. There are many other examples.

Many South Africans have negative stereotypes of Nigerians living in South Africa. How has this affected the businesses of Nigerians in South Africa?
This has been a root cause of resentment towards South Africa that was displayed in the recent diplomatic issue, which received major coverage in the Nigerian media right from the first deportations. Nigerians were squarely behind the anti-apartheid struggle, providing funding and political support.

They expected this would help to open doors for them after 1994, but they received a rather unfriendly welcome as a large criminal element had moved to South Africa and established the stereotype that tends to dominate the perception of Nigerians.

How have Nigerian businesses operating in South Africa been affected by the spat?

There has been much less inward investment to South Africa from Nigeria. This is mainly because business opportunities are in Nigeria. Where there has been expansion, mostly by Nigerian banks, they have avoided South Africa because of the stiff competition and market saturation here.

What challenges are normally faced by South African businesses operating in Nigeria?

Some of the main challenges are similar to many other African countries – choice of partners, corruption, poor legal systems, unpredictable and often harsh regulation, excessive bureaucracy, inefficiency and a relatively underdeveloped service market. Difficult logistics, particularly delays at Lagos port, poor infrastructure and poor power supply push up costs and make planning extremely difficult.

How have Nigerian businesses operating in South Africa been affected by the spat?

If there is any impact, it may also be related to people coming for business who were among those deported. But I am certain there has been no impact on actual business activities ongoing.

What should be done to improve trade relations?
The recent diplomat row has provided a new dialogue on problems between the countries. This will improve relations over the longer term. Both governments need to be sensitive to bureaucratic problems such as visas and health requirements.

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