In the last 15 years, we have witnessed a significant growth in South African investments in Nigeria.
This has happened because Nigeria created the opportunity for such engagement and South Africa displayed the capability to make these investments based on its advanced technology and greater industrial and manufacturing experience – much greater than Nigeria.
South Africa developed a very outward focus paradigm straight after the 1994 elections, where its Department of Trade and Industry embarked on an aggressive outward mission into the rest of Africa – almost using it as a means to rediscover and reconnect with the rest of the African continent to which it had been estranged for many years.
South Africa became increasingly comfortable in trading with the rest of Africa as it developed its own model for working away from home.
When you combine SA’s outward mission mindset with Nigeria’s open international economic investment policy, you begin to understand why we have over 150 SA organizations operating in Nigeria today.
Major companies include:
– MTN, which has a 45% (61.3 million customers) market share of the telecom industry and generated $4.1 billion in 2015 sales in Nigeria (about 43% of MTN Group total revenue)
– Shoprite Stores with 16 locations across the country and growing
– Tiger Brands with 49% stake in UAC Foods, 100% ownership of Deli Foods, and until recently 67% stake in Dangote Flour
– Famous Brands 49% stake in UAC Restaurants
– FirstRand Group via RMB Nigeria which is in the financial services sector and real estate
– Standard Bank through its stake in Stanbic IBTC.
– Naspers via ownership of DSTV/ Multichoice, Konga, OLX
– Old Mutual Insurance
– PIC investments in Dangote Cement, Ecobank, Notore, and CAMAC Energy
But one can also observe that the reverse is not the case in SA. While Nigeria has been receptive of investments and entry from South African corporates, the same cannot be said about South Africa.
Apart from the Dangote Industries’ $378m investment in Sephaku cement, there has been limited entry of Nigerian corporates into South Africa.
For example in the banking sector, despite success in establishing branches in West and East Africa, entering the South African market has proven difficult. Till date, two or three Nigerian banks have only a Rep. office in South Africa. Discussions with management of the Nigerian Banks indicate that the regulatory rules are prohibitive and the market is oligopolistic.
In other words, Nigerian investments are not making the same level of impact in South Africa.
But why is this so? The answer is a bit of a two edged sword…
In Nigeria, we have not learnt the art of beneficiating our raw materials and so do not have the finished products to export.
While nearly $4 billion worth of crude oil was exported to SA in 2014, you find that there are more South Africans involved in the production of a bottle of red wine than there are Nigerians who participate in the production of an equivalent quantity of crude oil. In other words, because of SA’s productive value chain, a litre of wine offers greater value to its economy than does a litre of crude oil to Nigeria’s.
Yes, we have observed the much tighter entry control of the South African Government to businesses, which also includes its Black Economic Empowerment policies (BEE), which we cannot argue against, but it however does keep other Africans away.
For all its worth, we have more Nigerians working as employees in SA in the field of medicine, education, arts, culture and other professional and even financial services but very few Nigerians have invested in manufacturing, industrial production and similar technical engagement.
Let us not flog these issues, because in all this lies the paradox of Nigeria and South Africa’s business opportunities.
The question is what can we do better to further boost balanced investment and trade relations between both our countries?
That is why we are here!
The first thing is to understand Nigeria’s priorities.
We want to be empowered with the competence and capability to add value to our own raw materials and agricultural output.
We want to be able to feed ourselves
We want to be assisted in beneficiating our raw materials through partnerships that empower our people with the capabilities through a process that is fair and equitable.
We want to enhance our import substitution capabilities as a nation.
We want to enhance our infrastructure, by building roads and highways, boosting our power output, constructing homes, enhancing our rail transportation systems.
We want to reduce the pressure on demand for our foreign exchange.
We want to be a great exporting nation.
So, the question to our South African Brothers and sisters is whether their value proposition ties in with ours?
We cannot encourage a trade and business relationship that only leads to the one -way flow of our currency.
We want clothing retail companies from South Africa to use our local designers, use our own sewing factories to produce clothes to sell to our teeming population. After all, we grow cotton just like South Africa.
It is not enough for South Africa to see our rapidly growing and financially empowered middle class as a huge market to be served by them. We welcome you to serve those markets but in partnership with the Nigerian people.
We want to serve our own market but invite you to invest in that process, for which we will reward you for bringing your technology, your capabilities and competence to create wealth with us by joining us in beneficiating our raw materials.
As you say truly South African, we also want to say increasingly – truly Nigerian.
We want South African businessmen to appreciate our country’s strategic value proposition, which is to become increasingly self-sufficient.
That is why the most successful South African enterprises here, are the ones who are more service oriented and engage our people as opposed to those who have a high dependency on our foreign exchange to bring in goods for sale.
Yes, retail is huge in Nigeria but it has to be serviced by Nigerians and we ask you to partner with us in that process.
The South African companies that faulter are those that are import dependent. The most successful South African companies are not import dependent.
It is the proliferation of South African corporates and investments that capture the true story of Nigeria’s lucrative market.
Let us define the philosophy of our engagement by finding unity of purpose in the economic aspirations of both our countries.
There in lies the secret of our successful mutual existence.
I must not sit down without mentioning the role that is played by the two Chambers of commerce, namely the Nigeria South Africa Chamber and the South Africa Nigeria chamber of Commerce..
..and I do recognize the immediate Past Chairman of the South Africa Nigeria Chamber in Johannesburg, Mr. Aderenle Oni, who is here with the South African entourage.
There are over 150 South African companies doing business in Nigeria in various sectors. Out of this number nearly a third are registered and active members of our chamber in Nigeria.
In the last 12 years of our existence, we have organized over 120 Breakfast meetings, sponsored by members, which provides a platform to network and discuss burning economic issues in both countries and globally.
We have a great relationship with the South African High Commission, which is represented on our Board and we commend the HC Ambassador Lulu Mnguni and the rest of his team in Lagos and Abuja for their unflinching support in resolving and working hard to deal with the thorny issues of visas for our members.
We appeal to the SA government to issue longer-term validity visas to members who genuinely want to do business in South Africa.
So, while Nigeria lays claim to being the richest economy on the continent, South Africa is clearly the wealthiest.
Given the current state of the weak commodity prices and global economic slowdown, this is probably the best time to strengthen both commercial and political ties in a period where diversification is paramount to economic growth.
Your Excellency President Zuma, on behalf of all the businessmen and indeed all Nigerians in the corporate world, we welcome you once again to our country, we welcome the businessmen that have accompanied you and we hope we can continue to strengthen our relationship for the good of both our countries.
We all look forward eagerly to the opportunity to make a return visit to South Africa and await your invitation.
Welcome!
Speech by Foluso Phillips on the occasion of the meeting of the Nigerian business community with South African President Jacob Zuma during his state visit to Nigeria which commence on the 8th of March 2016.