Nigeria and South Africa – Africa’s powerhouses can reap many mutual benefits
Business schools in both countries can help to address this issue and the challenges posed by the need to adapt to a wide range of African commercial cultures.
In addition, South African companies have been learning from their mistakes. For example, MTN Nigeria made great efforts after it entered the Nigerian market in 2001 to adapt to new employment and cultural demands by recruiting talented Nigerians; training South Africans and Nigerians together; empowering black South African managers; providing cultural sensitivity training to staff; and ending apartheid-style practices in the workplace.
However, South African companies have been criticized on not only a cultural, but also a structural, basis. Their approach to business has often been characterized as predatory and mercantilist. Although the partnerships that are sought by South Africa’s businesses with their Nigerian counterparts are regarded as less tokenistic and more genuine than in the past, they still often take the form of joint-venture acquisitions or controlling equity ownership rather than investment for growth.
Critics have also charged that South African investors often approach Nigeria as a destination for products rather than as an opportunity to invest to add value along the manufacturing chain. In defence of the value of South Africa’s economic contribution, the direct employment benefits of its investments continue to outweigh those brought by Nigeria’s main contribution to the South African economy, which is oil. The oil trade accounts for more than 95 percent of Nigerian exports to South Africa, and this may rise as the US-led embargo on Iranian oil bites.
Other benefits brought by South African companies to Nigeria include their introduction of new business models that benefit all consumers — such as prepaid telephone airtime in the 1990s and, more recently, innovative and highly successful online-and cellphone-based services that have brought banking to the previously unbanked. Nigerian companies could learn important lessons from such South African ways of doing business that can often straddle the formal and informal economies.
Of course, the success stories have not occurred in isolation. The co-operation of the Nigerian and South African governments has proved vital to the welfare of larger-scale business ventures — MTN Nigeria has acknowledged the debt it owes to the government in Abuja for its success in Nigeria.
In turn, big private-sector companies and parastatals can provide the important developmental benefits that governments often seek. SA has the ability to provide technical competence and finance that are needed to develop Nigeria’s transport, power, iron and steel, agriculture, and information and communication technologies sectors.