Opinion
Nigeria and South Africa – Africa’s powerhouses can reap many mutual benefits
By Dawn Nagar and Mark Paterson
As Africa’s two largest economies, Nigeria and South Africa could substantially enhance the continent’s development prospects — particularly if they work together more closely. South Africa, with a gross domestic product (GDP) last year of about US$368 billion, is Africa’s biggest economy, despite growth that is forecast to slow to less than 3 percent this year.
Meanwhile, the continent’s most populous nation, oil-rich Nigeria, overtook Egypt last year to become Africa’s second-biggest economy by GDP, recording US$232 billion. It has been envisaged that, with a growth rate of 7 percent, Nigeria could overtake South Africa by 2015.
Clearly, mutual benefits could accrue from a relationship that combines South African capital and know-how in creating business models for African marketplaces and within African institutional contexts, with access to Nigeria’s burgeoning economy of 140-million consumers — the single largest market in Africa and three times the size of South Africa’s. A recent policy seminar organized in Lagos by the Center for Conflict Resolution, and involving key diplomats and business people from South Africa and Nigeria, sought to explore these benefits and to strengthen ties between both countries.
South African and Nigerian business people have recognized the synergies. Trade between the two countries has grown 10-fold since 1999 and they are each other’s largest trading partners in Africa. The value of bilateral trade, which totalled only US$16.5 million in 1999, increased to more than US$3.6 billion by last year. Nigeria now represents a long-term destination for South African investments and is home to many of its recent business ventures. Telecommunications company, MTN led the way, posting greater profits from its West African operation than it did in South Africa within only four years of entering the Nigerian market in 1999.
Other notable South African businesses in Nigeria include Standard Bank; Rand Merchant Bank; Chicken Licken and Debonairs Pizza; SABMiller; and retailer Shoprite Checkers. Media house Avusa has opened Nu Metro cinemas and multimedia stores, and DVD and CD manufacturing plants. Multichoice has 700,000 Nigerian customers and has spent US$100 million developing local content.
Two airlines fly seven times a week between the two countries. Many South Africans now live in Nigeria, while an increasing number of Nigerians live in South Africa. In addition, further large-scale South African entries into the Nigerian market are planned. Retailers Massmart and Woolworths, insurance company Old Mutual, and beverage company Distell are looking to invest.
Notwithstanding the new partnerships, Nigerians have often accused South African companies of insensitivity in their bilateral economic relations. South African business people are sometimes described as “arrogant”. The perception is that many South African businesses operate according to the belief that all of Africa beyond South Africa’s borders is one homogenous entity amenable to the same business models.
