Monday, 16 November 2015 00:00

Fraught SA-Nigeria ties


REFLECTIONS on the history of Africa’s two biggest economies dominated the SA-Nigeria Chamber of Commerce’s (SA-NCC) 10th anniversary dinner in Johannesburg last week.

George Nene, a former South African ambassador to Nigeria, told guests of how his six-year sojourn in exile during apartheid was transformed into an ambassadorship when he was asked by former president Nelson Mandela to open SA’s first embassy in Nigeria in 1994.

Nene facilitated the long corporate trek to Lagos by companies such as South African Airways, MultiChoice and MTN.

The early relationship was dynamic. In 1999, the SA-Nigeria Binational Commission was formed and deputy president at the time Jacob Zuma was the lead representative in its early meetings.

In 2005, when the chamber was formed, MTN was already the market leader in Nigeria.

Its success in the market had attracted many other big household names, such as Protea Hotels.

That year, Nigerian oil company Oando listed shares on the JSE to great fanfare; Virgin Nigeria, the national airline for a time, started flights to Johannesburg.

Ten years later, investment and trade has escalated significantly. Nigeria is probably SA’s biggest trading partner in Africa and one of its biggest crude oil suppliers.

However, speakers at last week’s chamber dinner rued the fact that, at many levels, the relationship has not realised its full promise.

This is not about the statistics. It’s about a lack of trust, the easy triggers for disputes at official and unofficial levels; the fact that 20 years after the start of formal diplomatic relations, citizens of both nations are still only getting three-month visas to visit each other; a lingering — but erroneous — perception that the low levels of Nigerian investment in SA are the result of laws preventing such investments; and that South African companies are exploiting Nigerian consumers, a view exemplified by MTN’s success.

Its failure to cut 5-million unregistered lines, as directed by the Nigerian regulator, has led to accusations of arrogance. Other South African companies are often tarred with the same brush.

There are many possible reasons behind the excessive fine slapped on MTN. One is likely to be the view that MTN is making pots of money in Nigeria and the country should get some of it back.

This negates the reality that the company has reinvested billions into the country. Many Nigerians benefit from MTN. It has Nigerian directors, staff and shareholders. Even the vice-president has shares. But it is still a South African company and as SA’s flagship investor in Nigeria, it tends to set the tone for the perceptions about South African business. So this saga is unfortunate.

Many are surprised at the harsh penalty imposed on MTN. They shouldn’t be. As security is Nigerian president Muhammadu Buhari’s top priority, the link between unregistered lines and security was always going to be a red flag.

Strict adherence to the rule of law is another priority. The regulators have been harnessed to wield the new broom sweeping Nigeria.

Moreover, there is the question of Nigeria’s significant budget deficit — $5.2bn is a large chunk of change.

Nigerian companies are, however, also being penalised for regulatory infractions. The strong action against two of SA’s most prominent investors in Nigeria — Standard Bank is involved in a spat with a different regulator — was bound to suggest the new administration is negative towards SA.

The reality is that the Buhari government represents an opportunity to reset this often fraught relationship. The behind-the-scenes talks on the MTN fine may determine the way forward.

MTN took a gamble that didn’t pay off. It has been a harsh lesson and a wake-up call for other investors that it is not business as usual in Nigeria. But there will surely be business.

• Games is CEO of advisory Africa @ Work and executive director of the SA-NCC

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