Outward Selling Mission to Lagos, Nigeria

Outward Selling Mission to Lagos, Nigeria

Good morning

Allow me to express my gratitude on the hospitality shown to me and my delegation since our arrival in Nigeria.

It is indeed an honour for me to be here to provide remarks to the South Africa – Nigeria Business Forum. I am equally privileged to lead a South African business delegation comprised of over 30 men and women who are keen to do business in Nigeria, with the people of Nigeria, covering various sectors including engineering, manufacturing, consumer goods, infrastructure, energy and agri-business.

First and foremost, I would like on behalf of my Government, to congratulate President Muhammadu Buhari on his new election to lead the Federal Republic of Nigeria. I have no doubt that his presidency will ushera new era of prosperity, peace and stability for Nigeria and the continent at large. My Government also welcome the statesmanship shown by the outgoing President Goodluck Jonathan for handing over power in a peaceful manner. This, according to me, is a demonstration that democracy in Nigeria is maturing, and this serves as a good example for other African countries to follow.

The formalization of economic cooperation between South Africa and Nigeria led to the establishment of Bi-National Commission (BNC). The BNC is chaired at the level of the Deputy Presidents. In 2012, the two countries further signed a Memorandum of Understanding (MoU) on Economic and Technical Cooperation as a framework for increased collaboration on trade, investments and technical capacity-building. During the May 2013 State Visit to South Africa by President Goodluck Jonathan of Nigeria, Minister Rob Davies and his counterpart Minister Olusegun Aganga of the Federal Ministry of Industry, Trade and Investment, discussed efforts to enhance and strengthen commercial and economic relations between the two countries. Those deliberations were progressive especially in terms of ensuring a conducive environment for improved trade and investment.

South Africa regards Nigeria as a strategic partner in the continent and an important country as it represents over two thirds of market share for South African exports and investments in the West African region. Nigeria thus presents a long term export potential for South Africa in terms of investments and trade. Moreover, the size of its population and its wealth of natural resources makes Nigeria an important role player in African economic performance. Total trade between South Africa and Nigeria has increased from R20.5 billion in 2010 to R66.2 billion in 2014 representing an annual average growth rate of 56% during that period.

However, total trade between the two countries has been in favour of Nigeria. That is to say, in 2014, Nigeria’s exports to South Africa amounted to R55.7 billion whereas South Africa’s exports to Nigeria registered only R10.5 billion. Interestingly, South Africa’s main exports to Nigeria consisted of value added products such as vehicles, chemical products, electronic equipment, iron and steel products, whilst imports from Nigeria were dominated by mineral fuels which accounted for 99.7% of Nigeria’s total export basket to South Africa. First, in order to address the trade balance, the two countries should work together to remove trade barriers, particularly the unbanning of some products from the Nigerian trade import prohibition list to facilitate access of South Africa products into the Nigerian market. Second, it is important that Nigeria’s export basket to South Africa diversify to processed and value added products. This can be achieved when our governments undertake more targeted outward selling and investment missions to respective countries in order to promote more processed foods and value added products as well as increases in investment opportunities.

On the investment front, there has been a notable increase of South African multinational companies operating in Nigeria since 1999. Currently there are an estimated 100 South African companies doing business in Nigeria. South African companies have become significant players in almost all sectors of the Nigerian economy within a period of 11 years (1999- 2010). The sectors includes, but not limited to engineering, ICT, construction, aviation, media, hospitality, banking, retail, and oil and gas exploration services.

South African companies operating in Nigeria are listed as follows: MTN, Power Giant, Eskom Nigeria, South African Airways, South African Breweries (SAB miller), Stanbic Merchant Bank of Nigeria, Multichoice, Umgeni Water, Refresh products, PEP Retail Stores, Shoprite, LTA Construction, Protea Hotels, Critical Rescue International, South African-Nigeria Communications, Global Outdoor Semces, Oracle, Airtime, Standard Bank South Africa, which acquired IBTC Bank. Broll in Property market, Dimension Data, Telkom- Multilinks, Sasol, Ophir Energy, owned by Mvelaphanda Resources, Game, Steers, Sanlam to name but a few.

Recent investments include Distell stepping up investment in Nigeria by buying land in June 2014 to set up plants. In February 2013, the FirstRand investment banking division, Rand Merchant Bank (RMB) officially opened RMB Nigeria in Lagos, Nigeria, following the granting of an investment banking license by the Central Bank of Nigeria. RMB has been operating in Nigeria from a representative office since January 2010 and was already a player in the Nigerian investment banking sector. Nigeria continues to present various investment opportunities for South African operators.

I have equally, noted the strong presence of Sephaku Cement which had recently penetrated the South African market. Sephaku Cement is the first new entrant to the South African cement industry since 1934. The transaction which comprises a R779 million investment into Sephaku Cement by Aliko Dangote is said to be the largest ever Foreign Direct Investment (FDI) by an African company into South Africa.

Sephaku Cement began active production in South Africa in 2012, with two main production facilities spread in two different provinces in South Africa.

This is a good success story for Nigeria and I am proud of this as an African.

Ladies and gentlemen,

This Business Forum takes place on the back of ongoing uncertainty, particularly in the Eurozone – the latest being the Greek sovereign debt crisis – which continue to threaten the rate of recovery in the global economy. However, economic growth across much of the African continent has remained robust, with seven of the fastest growing nations coming from Africa. In recent years, Nigeria has been experiencing rapid economic growth, averaging over 7% a year over the past decade, making it one of the world’s fastest growing economies. In 2014, Nigeria registered an impressive 6.3% growth which came mainly from non-oil sectors showing that the economy is diversifying. Also, in 2014, Nigeria’s statisticians recalculated its GDP figures to take account of new industries such as mobile telecommunications and discovered that it had become Africa’s biggest economy, surpassing South Africa. Nigeria’s economy has a large population size of over 170 million and dominated by the youth. Nigeria has vast oil and gas wealt, fertile soil for agricultural purposes, untapped mining riches and entrepreneurial people who excel abroad.

This story suggests that transformation is under way across Africa in both economic and political arenas. The African continent is the next frontier of economic growth and development. Africa’s time has come. This is opportune as it positions Africa well to be part of the new global order that will be led by the developing south. Africa’s enormous reserves of raw materials, 60% of the world’s unused arable agricultural land, a young growing population, a growing middle class with considerable purchasing power, and urbanisation alongside steady improvements in economic governance are all factors which contribute to Africa becoming the leading source of global economic growth. Currently, Africa offers the highest returns on investment of any region.

An important lesson from the 2008-09 ‘Great Recession’ is the importance of intra-Africa trade as a basis for sustained growth. Intra-Africa trade is estimated at about 10% compared with 40% in North Africa and 60% in Western Europe. Undoubtedly, the expansion of trade among sub-Saharan African nations holds the key to faster growth and development to the benefit of all its citizens. To unlock this potential, countries will have to focus more on trade facilitation, including the simplification and modernisation of trade procedures.

South Africa’s priority is to champion an ambitious integration and development agenda in Africa in respect of our engagements in SACU, SADC and in the recently launched Tripartite Initiative to integrate SADC, the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA). The T-FTA will combine the markets of 26 countries with a population of nearly 600 million people and a combined GDP of US$1 trillion, providing the market scale that could launch a sizeable part of the continent onto a new developmental trajectory. The T-FTA will form the basis for an Africa-wide FTA, which is expected to create a market of US$2.6 trillion. This will address the challenge of small and fragmented economies in Africa, lack or slow pace of industrialization, poor infrastructure and mechanization. A larger, more integrated and growing market would enhance the interest of foreign investors in Africa and provide a basis for enhanced intra-African trade. This envisaged Continental FTA (C-FTA) will therefore widen and build on the integration initiatives already underway.

In conclusion, Ladies and Gentlemen, I believe that there is work that still needs to be done in terms of further strengthening commercial and investment relations and particularly this business forum will deliver results in the form of new collaboration and trade partnerships in key areas of opportunities and it will strengthen and deepen mutually beneficial economic relations between the two countries.