In recent years, relations between Africa’s two economic powerhouses have undulated rather violently. Wave after wave of political, economic and diplomatic deals and toxic rows have made observing the progress in the partnership (or the lack of it) between these countries a bewildering endeavour.
The evidence suggests that the ties between Nigeria and South Africa are not as unstable as media reports over the past few years would have us believe. At least, not as far as the business side of things is concerned. It has been announced that the volume of trade between Nigeria and South Africa hit ₦1.3 trillion in 2015.
Louis Mnguni, South Africa’s high commissioner to Nigeria, broke the news in a ceremony to mark the South African Freedom Day in Lagos. The rate at which trade between these countries has grown is also staggering; from a very low base of $7 million in 1999, the two countries now trade goods and services worth about $4 billion. Investment by South African firms in Nigeria accounts for a large fraction of this, with several companies from that country taking advantage of what they see as one of the most lucrative and strategic markets in Africa. And from the look of things, they haven’t been doing badly.
Mr Mnguni also attributed the rapid growth in the volume of trade between the two countries to Nigeria’s demand for automotive parts. South Africa’s exports to Nigeria include cars and other vehicles, structures and structure parts, uncoated paper and paperboard. According to the high commissioner, about 120 South African companies currently operate in Nigeria. The sectors in which these companies may be found include the engineering, construction, media, ICT, aviation, banking, retail chain hospitality and gas exploration services.
Mr Mnguni went on to suggest that a match between Nigeria’s potential and South-Africa’s areas of expertise made the growth in trade possible.
“Nigeria presents a huge market with a population of over 170 million people and vast resources, while South Africa presents the technical know-how in developing industries”, he said.
However, some have raised questions about the extent to which Nigeria benefits from its economic ties with South Africa. These critics have lamented that while South African businesses such as MTN, Multichoice, SAB Miller, South African Airways and Shoprite thrive in Nigeria, their Nigerian counterparts in South Africa (mostly SME’s) face discrimination from authorities at various levels. Despite this, Mr Mnguni did point to the presence of Nigerian businesses in South Africa as a sign that benefits from the expansion in trade volume were not lopsided in his home country’s favour. He referred to them as playing a “dominant” role in South Africa’s small business sector.