Nigeria, S. Africa grapple with structural economic challenges

While South Africa and Nigeria — Africa’s biggest economies — might be involved in a competitive battle for pre-eminence on the continent, both countries are grappling with structural socio-economic challenges that are stunting trade, domestic growth, and co-operation between Africa’s giants.

This was the main sentiment expressed at the South Africa-Nigeria Chamber of Commerce (SA-NCC) breakfast discussion held in Sandton on Wednesday.

Nigeria’s recent presidential elections were a cause for concern to skittish investors, not least because of a six-week postponement.

The country eventually saw the ascension of former military ruler Muhammadu Buhari who was sworn as President at the end of May, promising tough action against Boko Haram as well as a clampdown on corruption.

Foreign exchange is slow to enter the Nigerian economy because of investor uncertainty over the new government’s direction under Mr Buhari who has yet to announce his cabinet, which he said would be unveiled in September, said panellist and CEO of Red Step Investments 40 Olatunde Aloniawo.

But President and CEO of First Bank of Nigeria Mortgages Lagos Adenrele Oni said this comes down to Mr Buhari’s strategic, yet slow, approach of tackling Nigeria’s issues, including careful consideration of prospective cabinet ministers rather than accepting a party mandated cabinet.

While South Africa is “falling asleep at the wheel” — according to director of Professional Shipping Heloise Kruger — Nigeria has showed steady growth over the years despite severe domestic challenges including the threat of Ebola, the Boko-Haram insurgency, and a low oil price which is still eating at growth margins in the largely oil based Nigerian economy.

In the wake of xenophobic violence in Johannesburg and Durban earlier this year, Nigeria recalled it’s ambassador from South Africa amid reports that Lagos had given Pretoria 48 hours to stop attacks on foreign nationals or face a backlash on South African businesses in Nigeria, including cell phone giant MTN, Multichoice and Shoprite.

South Africa’s latest visa regulations that the Department of Tourism says were put in place to crack down on child trafficking was also a touchy point at the discussion and CEO of Africa @ Work and Executive Director of the SA-NCC, Dianna Games, said the regulations were simply hurting trade with the rest of Africa.

“What you are cracking down on is trade and investment. It also creates the sense of South Africa being unwelcoming for African visitors and we already have the added complication of attacks on foreigners,” said Ms Games in a separate interview.

“Angolans and Nigerians are among the top spenders among tourists in South Africa. People are rather going to the UK, Dubai, and other parts of the world.”