Nigeria and South Africa – Africa’s powerhouses can reap many mutual benefits
South African businesses could usefully explore the opportunities that can flow from joining one of Nigeria’s 20 free-trade zones, or even establish a new one, in order to ease access to the country’s high-growth economy, and service its major infrastructural deficit on favourable terms. Given the context of high tariff and nontariff barriers that can inhibit intra-African trade — estimated at less than 10 percent of the continent’s total imports and exports — the idea of a Nigeria-SA free-trade area, which was proposed by the Nigeria-SA Bi-National Commission in March 2002, could be worth reviving.
However, the investment opportunities that may flow from Nigeria’s infrastructural deficit are inhibited by the relatively poor institutional governance ratings that, to a large extent, helped to create the deficit in the first place.
The bigger picture is that, in spite of its relatively impressive growth rates over the past decade, Africa still only accounts for 3 percent of global trade. About 70 percent of Nigerians live in relative poverty, despite the US$400 billion in oil revenues that have been generated in the past 50 years. South Africa remains the most unequal society in the world.
Strong trade and economic growth can only be realized alongside African leadership that is committed to tackling corruption and building state capacity to provide proper education opportunities, safeguard national health, tackle unemployment and pursue inclusive economic policies that raise people out of poverty. The governments in Nigeria and South Africa, as much as their business sectors, need to play their part to help to realise the full benefits of Africa’s potentially most strategic bilateral relationship.
Dawn Nagar is a researcher and Mark Paterson a senior project officer at the Center for Conflict Resolution.
A version of this article was first published on Business Day