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- March 2012
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The more SA’s position as the gateway to Africa for foreign investors is eroded by a changing global order that includes changes in Africa itself, the more the debate in support of it seems to be aired in public forums locally.
The issue has come back onto the agenda as the BRICS (Brazil, Russia, India, China and SA) summit in India approaches. SA’s membership of the group has lent credence to the country’s perception of itself as not just the gateway to Africa but also the representative of Africa. Critics would argue that it qualifies on neither count in any definitive way.
Officially, SA has been slow off the mark to capitalise on its natural advantages as the traditional Africa gateway that has been exploited by western multinationals for years.
Only in the past few years has the government has started to discuss ways to formalise this historical advantage and ensure that SA remains the gateway of choice.
Since 2008, the Treasury has been discussing how to position SA as a financial gateway. This has led to some exchange control concessions for Africa-specific investments, for example. Since 2009, the Department of Trade and Industry has also been discussing ways to better position SA as a gateway but nearly three years later, this is still a work in progress.
While the bureaucrats mull over the issues, Africa is already moving on. The continent is awash with international investors flying directly into Lagos, Nairobi, Kigali, Maputo and Luanda in search of deals, opportunities and partners. Global hotel brands are popping up across the continent and new shiny office blocks housing myriad foreign companies are changing the skylines of African cities.
These developments undermine the notion of a single gateway to Africa as the debate in SA presupposes.
SA will undoubtedly remain a destination of choice – it is still continent’s biggest and most diverse economy and its infrastructure and services industries are still well above its gateway “competitors” in Africa. It is also attractive to new emerging market investors looking for companies and managers with pan-African experience and footprint.
But the notion of a single gateway is losing ground. As the global order changes, so business models and investor considerations of Africa are also changing.
Logistics and geography are playing a greater role in international business. Improving transport links between African countries and international markets is obviating the need for SA to be a key part of the supply chain for goods that do not originate there.
Business decisions are increasingly based on regional and sector-specific considerations, which is influencing the choice of location for companies. South African companies are benefiting from this given their strong presence in many key African markets that are becoming gateway economies.
The potential scale of operations and increasing competition for business opportunities in Africa means multinationals need a presence in multiple markets rather than trying to run far-flung and difficult markets from Johannesburg.
Hundreds of companies operating in the biggest areas of new investment and growth – mining, oil and gas – view strategic conferences such as the annual Mining Indaba and Africa Oil Week as their “gateway” to Africa’s opportunities.
Transport corridors, the rehabilitation of transport infrastructure and improving performance of ports such as Beira, Maputo and Walvis Bay are providing alternatives to Durban and changing trade patterns in southern Africa.
While China’s diplomats constantly refer to SA as the economic giant’s gateway to Africa, its companies – and politicians – tend to deal with Africa directly from Beijing.
The premise in international forums that SA speaks on behalf of all Africans and has significant influence over continental debates and agendas is not unanimously embraced within Africa. The assumption that one country would speak for the whole continent is in any case flawed and diminishes the diversity of the continent and capabilities of other players.
Nevertheless, SA’s role in Africa is vital and it needs to maintain its relevance as a pivotal economy. It needs to do this by focusing on its competitive advantages – doing better what it does best.
It also needs develop a compelling “SA Inc” investment case and strategically link its interests to other African gateways to realise greater benefits for SA in the new scramble for Africa.
Unseemly diplomatic spat could easily have been avoided
THE icy wind blowing down to SA from hot and humid Nigeria over mass yellow-fever certificate deportations this past fortnight has highlighted the tensions that lie close to the surface in this uneasy relationship between Africa’s two pivotal states.
This issue highlights not the problem of health requirements as much as the negative perceptions about each other’s nationals. The yellow-fever certificate issue is not new. It has been a thorny issue between the countries for years.
The question is why it has not yet been resolved by authorities on both sides of the fence. Notwithstanding SA’s apology to Nigeria for the poor treatment of Nigerian nationals, the issue at the heart of the matter has not been clarified. Are many Nigerians travelling on fake or problematic yellow-fever certificates or not?
It is clear this is not being policed properly at key points, despite the fact that SA’s authorities require the certificate in order to issue visas and immigration and airline authorities in Lagos are also supposed to do checks. And yet touts freely sell yellow-fever certificates outside Lagos’s airport.
Nigeria’s health minister says there has been no case of yellow fever since 1995 and there is no need for the certificate. But that misses the point. It is currently a legal requirement and should be respected by everyone.
But it is also not clear if there were real problems with the yellow-fever certificates of 123 people sent back off two flights 10 days ago, sparking the diplomatic incident, or if it was simply the result of bad attitude by a bureaucrat. The bilateral political dialogue that has taken place as a result of the diplomatic fracas has been positive. Officials have examined longstanding problems that have been raising tensions and perhaps they can finally be resolved. But it may take longer to tackle the deep-seated issues that lie at the heart of the problem.
Many analysts talk about the geopolitical aspect of the relationship — the competition between the two economic powers for prominence on the global stage. But it is actually the “soft” issues that have the most effect on relations between the countries.
Nigerians actively campaigned against apartheid for years and expected a warm welcome in SA in 1994. Instead they were greeted with hostility and suspicion.
The image of Nigerians being criminals was created by a tiny minority, but few South Africans bothered to look beyond the stereotype — although increasing business ties have markedly improved the situation.
The difficulty Nigerians experienced in getting visas to come to SA, and their poor treatment by officials at our diplomatic missions, fuelled tension and led Nigeria’s immigration authorities to tighten visa requirements for South Africans.
Unfortunately, when the political relationship hits a bad patch, South African companies bear the brunt of it as they are the face of the bilateral relationship in Nigeria. Business people suffered most from Nigeria’s retaliation on the visa issue and they formed the bulk of those turned back at the airport recently. The foreign minister had already threatened to “clamp down” on SA’s companies if SA did not apologise for its immigration officials’ actions.
Nigeria’s politicians also believe that the trade and investment relationship between the countries should be more equal.
This view negates economic and market realities but unfortunately it informs political sentiment.
Leaders on both sides have neglected the broader political relationship recently. The binational commission has become moribund and we have yet to see a state visit in either direction under the Zuma and Jonathan administrations.
No side came off very well in this unseemly diplomatic spat. For two countries that are seen as Africa’s key problem-solvers, there was no reason it should have come to this. Hopefully there is no lasting damage. The reality is that SA needs Nigeria more than Nigeria needs SA. The country is one of our biggest trade and investment destinations and a major source of crude oil.
Keeping the relationship on track does not mean compromising our regulations but it does mean applying them with respect.
• Games is CE of Africa @ Work and honorary CEO of the SA-Nigeria Chamber of Commerce.
REPORT: South Africa as Africa's Gateway: A Perspective from Business
Dianna Games
SA Institute of International Affairs, March 2012