Nigeria-South Africa: Over 30 bilateral agreements, little implementation – Consul General
South Africa and Nigeria are the largest economies on the African continent, and both are expected to play leading roles in the African Continental Free Trade Area (AfCFTA) that took off in January. While South Africa buys more from Nigeria as current trade data show, DARKEY AFRICA, South Africa’s Consul General in Lagos, in this interview with CALEB OJEWALE, speaks about areas of opportunities to expand trade. He expressed hope that the Joint Ministerial Advisory Council on Industry, Trade and Investment will be instrumental in investment led initiatives between the two countries as well as addressing trade impediments that are currently affecting both exports and investments opportunities between the two countries. Excerpts:
There was a lot of hope on AfCFTA being a game changer for trade across the continent, what are early reports indicating on its trajectory since taking off in January?
Indeed, the African Continental Free Trade Area (AfCFTA) is a big game-changer for the continent. It is going to ensure that Africa develops at its own pace and it uses whatever resources it has for the benefit of the continent. We have said so many times that Africa’s time has come. We must also realize that, unfortunately, at the time that the AfCFTA ought to be implemented, we had COVID for the whole year. That affected some of the preparations, but what is important is that it has started. Most of the countries, 54 countries except Eritrea, have embraced it and that is a good sign. It is the beginning of a new development trajectory for the African continent.
However, a few things need to happen first. One of them is that it must be legally implementable and technically sound. Also, there has to be reciprocal tariff schedule and concessions from member states that have ratified the agreement.
Furthermore, the tariff lines must go in accordance with the agreed rules of origin. There must also be provisions for key customs documentation, and this requires both the declaration of certificate of origin, and domestic legislation to administer imports in every country. However, these have taken off very slowly because of the challenges that we had, especially the Covid-19, but the entire continent is ready.
As an envoy based in Nigeria’s economic capital, from your knowledge, what things do you think need to be done if Nigeria would take full advantage of AfCFTA?
Like I said, these four requirements earlier referred to, each country must be ready. Remember, all the countries that are signatories to the agreement have uneven economic development and certain challenges of infrastructure, which is very critical. The mobility of goods and persons across the continent, the liberalization of trade would require that countries have necessary infrastructure. Therefore, it is expected that every signatory to the agreement is getting ready to do that.
The key things would be to do some of these soft issues. Remember there is an agreement that about 81 percent of goods are going to be traded across the continent without tariffs. All the countries will have to make sure that at a minimum, they meet these four requirements. As you may know, all these agreements are not easy to implement. Even the EU has had its own challenges, so we are not anticipating that it will not be without hurdles. We think there is commitment to ensure that all these conditions are met and Africa is ready to trade.
South Africa and Nigeria are the two largest economies in Africa. What would you say South Africa expects from Nigeria in achieving better business relations?
Let me say that agreements are mutual. We have the bilateral relations. Since the state visit by His Excellency, President Muhammadu Buhari to South Africa last year, and the meeting between the two presidents, there has been a lot of progress in many other areas. For instance, there was agreement on how the issue of immigration would be dealt with in a totally different way. There was also an agreement around issues relating to aviation. As you may be aware, the Airpeace is travelling now to Johannesburg and Lagos and this was a consequence of those discussions. There is going to be a joint ministerial council committee that is going to be dealing with issues arising from those discussions. It is my belief that, in those meetings, some of the issues on how to liberalize and open up trade between the two countries would be discussed. Quite a number of structures have been established to deal with the challenges that we identified at the time. The prospects for better and greater engagement and trade between Nigeria and South Africa are quite positive.
Can you give us an insight into the volume of trade between Nigeria and South Africa?
There has been a slight decline in the volume of trade between the two countries from 2016 till date. You may be aware that between Nigeria and South Africa, 90 percent of our trade relies on oil. In a sense, we are purchasing more from Nigeria than it does from South Africa. Nigeria gets car parts from South Africa and all of that, but we get more oil from here. The volume of trade between the two countries has been going down between 2016 and now, and this is a matter that has to be addressed in the committee that has been established between the two countries. The prospects are quite positive, so there is a need to now make sure that the structures that are established between the two countries are working, as well as fixing the challenges to trade between the two countries. They must be addressed quite openly to make sure that there is better engagement. The free trade agreement, having been implemented, means there would have to be greater attention on these issues.
Is it possible to highlight what you think is responsible for this decline and what your thoughts are on how we can boost the trade volume?
We have a lot of companies operating from Nigeria. The most popular brand from here is Dangote in South Africa. There is a need to open up these areas of trade so that we can have more investments from here into the economy of South Africa. We have had discussions with the Tony Elumelu Foundation on once the free trade agreement is implemented. South Africa and Nigeria will have to open up so that we’ll have Nigerian financial institutions also operating in South Africa as much as those that are in South Africa operating in Nigeria. This way, the free flow of goods can be facilitated through easy access to financial services by virtue of these institutions operating in these areas.
The volume of trade between the two countries has been going down between 2016 and now, and this is a matter that has to be addressed.
If we can implement the bilateral agreements that we have, it will boost the volume of trade between the two countries and it will also open other areas of trade.
MTN employs a lot of people, Shoprite also employs a lot of people, making key contributions to the Nigerian economy. If we create conditions where these businesses can thrive, both here and in South Africa, then it means that the local economies will benefit from the agreement between these two countries
Apart from oil, which South Africa gets from Nigeria and vehicle parts, which Nigeria gets from South Africa, what are the other main drivers of trade between these two countries?
In 2014, the total volume of trade between Nigeria and South Africa was 66 billion rand. It went down in 2015 and by 2018 was 56 billion rand. The top five export products of South Africa to Nigeria are plastics and articles, machineries and mechanical appliances, base metals, prepared foodstuff, product chemicals for industries and others. What we get from Nigeria is predominantly oil.
What untapped areas of business opportunities exist between both countries?
They are quite many. We can improve on what we are doing, but one of the things that we have been exploring is the creative and cultural industries. South Africa has a very strong television sector, and the infrastructure in that regard is quite good. Nigeria has a very strong nollywood sector. We have not explored the issues around fashion, culture, and the creative industry in general. Remember the creative industries in Nigeria contributed for changing the GDP here when it was rebased. We think this is an area that has not been explored sufficiently between the two countries.
Also, we must begin to industrialize significantly. The manufacturing sector must be strong in both countries so that issues can be identified and we can be able to trade between the two countries. We have more than 30 bilateral agreements between South Africa and Nigeria, stretching from almost every sector. The key issue is implementation. If we can implement the bilateral agreements that we have, it will boost the volume of trade between the two countries and it will also open other areas of trade between the two countries.
How have South African businesses in Nigeria fared over the last five years and what major challenges stand in their way in doing better?
Sometimes, the issue of taxation and repatriation of money to South Africa is a problem. Also, Customs delays to get their goods here. These are issues that have been addressed and we believe that with the free trade agreement, most of these problems will go away. It has taught us a lot of things that we must avoid to make sure that the free trade agreement is implemented successfully, and to the mutual benefit of all the countries, in particular, South Africa and Nigeria.
On the flipside, when we talk about Nigerians in South Africa, one thing people will be keen to hear of when they read this interview is the xenophobic attacks. Can we conclusively say that this is a thing of the past?
Sometimes, we make the mistake of generalizing isolated activities and make them big. I can tell you that there is no such thing in South Africa. There has never been. In the 1960s, people from Malawi and Mozambique started staying in South African townships. There has never been any incident against these people, and they come from other parts of Africa. There is no culture of anti-African tendencies or campaigns like that. The kind of system that we have set up between the two countries is aimed at addressing any possible problem that may arise. The notion of xenophobia in South Africa is essentially misplaced.
You mentioned in one of our emails that you completed an MA from the University of London, in diplomacy, where you focused on the relations between Nigeria and South Africa. Can you give some insights on what your research focused on?
I focused on how diplomatic, political, trade and immigration issues evolved between Nigeria and South Africa, to be able to understand the dynamics around these issues. Since 1994 when South Africa entered into formal trade relations with Nigeria, there have been engagements between the two countries to try and address issues to enhance of relations.
One of the things I found out was that we have over 30 agreements between the two countries, and we have re-confirmed them in the state visit when His Excellency, President Buhari came to South Africa. In a nutshell, we have much that we have done and we have left all that we have done to misinterpretation because we are not communicating. The structures that we have established need to work even better. We must make sure that we engage with the media to communicate the positive narratives between the two countries. If we do that, it will change perceptions and we will also show people that something is happening between the two countries. The other issue deals with immigration challenges. We need to address the issues openly, so that we can minimize what happens as a result of these between the two countries.
Have you tried to make recommendations to policymakers based on your findings in order for them to implement and effect change?
In our engagements with the Nigeria-South Africa Chamber of Commerce, we refer to some of these issues on how we can change the narrative. How do we make sure that we talk to the media about issues? Most people do not know over 90 percent of issues we are engaged in. As I said, the issue is implementation. Agreements that are not implemented will not yield results. The prospects are positive.
For instance, when companies invest here, people are employed. MTN employs a lot of people, Shoprite also employs a lot of people, making key contributions to the Nigerian economy. If we create conditions where these businesses can thrive, both here and in South Africa, then it means that the local economies will benefit from the agreements between these two countries.
In your experience, what can be done to strengthen diplomatic ties between South Africa and Nigeria?
The experiences that we have gained over time and the challenges we may have experienced will probably have to be harnessed to ensure that trade under the AfCFTA does not have a lot of hurdles. I’m quite hopeful that things will be better. The key thing is that we will have to agree and do the right things. We must create a new architecture for free trade in the continent. If we do that, some of the issues we may have been going through will no longer be there.
Nigeria has been talking a lot about developing agriculture but the results have not been so impressive despite the potentials. South Africa, on the other hand, has done well. How can both countries collaborate to strengthen the Agric sector in Nigeria based on the success in South Africa?
The agricultural sectors in many countries, including South Africa, have been facing their own challenges. We need to harness the experiences we have. It is not that South Africa can say to Nigeria, this is how you must do it, or Nigeria can say to South Africa, this is how you must do it. Both countries can learn. One of the agreements currently existing is on agriculture. Had we sat down and implemented it, we would have exchanged ideas. We need to make sure that all the agreements we have are implemented and the exchanges can be made. There are many Nigerians who are farmers in South Africa and there are some South African farmers who are here assisting. There is a bigger picture, making sure that we share experiences so that both countries can mutually benefit from the agreements that we have on agriculture.
If we can take practical steps on agriculture, what needs to be done? Who needs to take actions?
Countries make agreements and they become responsibility of the relevant departments. The ministry of agriculture would be the relevant department in both countries and they would have to interact through established committees to make sure there are benefits.
For example, Sasol in the past, took a number of young people from Delta state to go and train them in South Africa. When I visited Delta State sometime back, we spoke about the need to revive these kinds of exchanges, and we can do that with agriculture. The youth are the most important motive force for change in Africa. They must not say agriculture is not for them because we need it to thrive so as to achieve food security.
The recovery plan in Nigeria recognises agriculture as central, the national development in South Africa also identifies agriculture as very key but we are not interacting to share experiences and explore the potentials of both countries.
What does South Africa expect from Nigeria if AfCFTA is to be successful?
When one country enters into an agreement with the other, they expect greater mutual understanding and greater solidarity. Once these things are there, there would be more openness to deal with issues that are confronting or impacting on the relationship in any way; negative or positive.