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South African Businesses In Nigeria - Nepad - Obj's Gift! - We Don Finish So! by ph4life(m): 10:39pm On Jun 30, 2007
Shawn Hattingh (2007-06-28)

South Africa has played an intimate role in the recent Nigerian
elections. Despite what the ANC government claims, South Africa's
foreign policy towards Africa is not based on Pan-Africanism or
anti-imperialism; it is rather based on promoting South Africa's
expanding business interests on the continent. In reality, the South
African state's interests, in both the domestic and African arena,
have become fused with those South Africa's capitalist elite. The
ruling party in Nigeria has served the South African capital and the
state's interests well. It has facilitated the process whereby South
Africa has become a major economic player in Nigeria in only 8 years,
writes Shawn Hattingh.


From the very start, the recent Nigerian elections, which saw Olusegun
Obasanjo placing his hand picked successor, Umaru Yar' Adua, into the
Presidential palace, were mired in controversy. The ballot papers for
the election, which were printed in South Africa, contained no counter
foils or serial numbers – features which would have made vote rigging
difficult. In fact, only 40 million ballot papers were even printed;
this for an election where over 65 million people had registered to
vote [1]. To make matters worse, only 30% of these ballot papers were
ever sent to Nigeria; the rest remained lying in a warehouse in
Johannesburg on day of the elections [2]. Of the ballot papers that
were sent to Nigeria, most were rushed off to areas that were and are
strongholds of Obasanjo's and Yar' Adua's ruling party, the People's
Democratic Party. In contrast, areas where there was strong opposition
to the government, such as the Niger Delta, did not receive enough
ballot papers. On the day of the election, independent observers noted
that vote rigging and fraud were rife. Yar' Adua supporters were even
seen stuffing fraudulent ballot papers into ballot boxes at voter
stations across the county [3]. Intimidation of opposition supporters
was also widespread. In fact, over 200 people, mainly members of the
opposition parties, were murdered in the run up to the elections [4].
This situation that led most independent observers to declare the
elections deeply flawed.

The South African government, however, had a very different view of
the elections. Spearheaded by Thabo Mbeki, it came out and said the
elections had been free and fair. Indeed, South Africa was the first
country to congratulate and offer support to the ruling party's
candidate, Yar' Adua, on `winning' the elections [5]. Immediately
following this, he was invited to Tshwane to have a personal
congratulatory meeting with Thabo Mbeki. The question is: why would
the South African government fall over itself to congratulate Yar'
Adua on `winning' an election that was so clearly rigged? The answer
to this question lies in South Africa's policy towards Africa, in the
form of New Partnership for Africa's Development (NEPAD), the
relationship that it has with the ruling party in Nigeria, and the
expansionist agenda that South African corporations and parastatals
have in Nigeria.

South Africa's policy towards Africa: neo-liberalism and NEPAD

Despite what the ANC government claims, South Africa's foreign policy
towards Africa is not based on Pan-Africanism or anti-imperialism; it
is rather based on promoting South Africa's expanding business
interests on the continent. In reality, the South African state's
interests, in both the domestic and African arena, have become fused
with those South Africa's capitalist elite.

In Africa, South Africa has used it hegemonic position, based on
leadership by consent and at times coercion, to develop a neo-liberal
policy – NEPAD - for the entire continent. The close relationship that
exists between the South African state and South African capital is
the main reason why NEPAD emerged [6]. Representatives of South
Africa's capitalist class, along with other neo-liberal government
advisors, played a central role in developing NEPAD. In true hegemonic
fashion, however, South Africa also brought junior partners on board,
such as ex-president Obasanjo of Nigeria, so that it could pass its
own initiative off as an African initiative.

Nonetheless, South Africa's control over NEPAD is underpinned by the
fact that NEPAD's headquarters are situated in South Africa. It is
also no mere coincidence that Thabo Mbeki's main economic advisor,
Professor Wisemen Nkuhlu, is the executive head of NEPAD.

NEPAD itself is based on some of the classic pillars of neo-liberal
economic fundamentalism. It views the private sector as the main
driving force of the African economy. As such, NEPAD states that all
barriers to companies making profits in African countries, such as
Nigeria, should be removed. It explicitly promotes the development of
the private sector; privatisation; free trade; financial
liberalisation; labour flexibility; and foreign direct investment in
Africa [7]. Indeed, NEPAD states that foreign direct investment is its
most important pillar. Considering that South African corporations and
parastatals are already responsible for the vast majority of foreign
direct investment in Africa, it is very clear who stands to benefit.
In fact, all of NEPAD's neo-liberal pillars are creating a climate
that facilitates the expansion and profiteering of South African
companies in Africa. The reality is that NEPAD aims to further
entrench the neo-liberal policies that the IMF and World Bank imposed
on Africa, only this time the South African government hopes it will
be to the advantage of South African multinationals [8]. Wisemen
Nkuhlu stated as much in 2003, when he said:

"South Africa's self interest in the socio-economic development of the
continent is well understood by business. South Africa needs markets
for her products and access to raw materials that are not produced in
South Africa. Countries like Angola, the Democratic Republic of the
Congo, Equatorial Guinea and many other countries have resources that
are of economic interest to South Africa…. Supporting and sponsoring
NEPAD, places South Africa in a strong position to become the
preferred development partner by a number of African countries"[9] .

The South African state has not only opened up Nigeria's economy to
South African investments and exports through NEPAD, it has also done
so through bi-lateral agreements and a Bi-national Commission.

South Africa's bi-lateral interventions in Nigeria

Prior to 1999, South Africa had a poor political relationship with
Nigeria. At the time, Nigeria was ruled by a military junta that was
politically hostile towards South Africa. This, however, dramatically
changed with the end of the military government and the election of
the People's Democratic Party's leader, Obasanjo, as the Nigerian
president in 1999. From that point on, the South African state built a
strong, but unequal relationship with the People's Democratic Party
government under the leadership of Obasanjo and Yar' Adua. This
relationship was also helped by the fact that Thabo Mbeki had formed a
strong friendship with Obasanjo and Yar' Adua when he was in exile in
Nigeria from 1976 to 1979 [10].

In 1999, the South African and Nigerian governments signed bi-lateral
agreements on trade and investment. These agreements, amongst other
things, aimed to increase the amount of trade and investments between
South Africa and Nigeria [11]. Along with this, the agreement on
investments specifically protected South African companies'
investments in Nigeria, which included protection from any possible
future nationalisation [12]. Indeed, the agreement on investments was
highly favourable for prospective South African investors in Nigeria.
Added to this, the two governments also signed an agreement on
eradicating double taxation. This meant that South African companies
that paid tax in Nigeria would not have to pay tax again on profits
that were, and are, repatriated to South Africa [13]. Such measures
were aimed at increasing the attractiveness of Nigeria for South
African investors.

In October 1999, a South Africa-Nigeria Bi-National Commission was
also established by the South African and Nigerian governments. The
Bi-National Commission has been meeting twice a year ever since, and
aims to increase the amount of trade and investment between South
Africa and Nigeria. The Deputy Presidents of South Africa and Nigeria
head up the commission. Representatives from all government
departments attend the meetings along with top South African business
people. At the meetings, trade and investment opportunities in Nigeria
are identified and plans are put in place so that they can be
realised. In this way, many deals that have proved very lucrative for
South African companies and parastatals have been facilitated through
the Bi-National Commission.

The South Africa-Nigeria Chamber of Commerce also arose out of the
Bi-National Commission. Some of the largest South African companies
that have investments in Nigeria are members of the Chamber, such as
MTN, Standard Bank, First Rand, Imperial, Johncom, Massmart, Nampak
and Sun International [14]. The main goal of the South
African-Nigerian Chamber of Commerce is to identify investment
opportunities in Nigeria for South African corporations [15]. Added to
this, the South African-Nigerian Chamber of Commerce also provides
information on Nigerian government policies and how to do business in
Nigeria. It also conducts market research for South African companies
wanting to invest Nigeria. The Chamber receives strong support from the

South African government. On many occasions the President, Deputy
President and other government officials have addressed and offered
support to members of the Chamber. Linked to this, the Department of
Trade and Industry (DTI) launched the South African-Nigeria Business
Investment Forum to assist South African companies wanting to invest
in Nigeria [16].

The South African High Commission in Nigeria also provides massive
assistance to South African companies investing, or wishing to invest
in Nigeria. In fact, it works closely with the South Africa-Nigeria
Chamber of Commerce and the DTI to further South African business
interests in Nigeria. It also provides various services to prospective
South African investors in Nigeria, including providing contacts and
information on Nigeria's business climate.

All of the above measures have been extremely valuable in furthering
South Africa's business interests in Nigeria. Indeed, the South
African state has used its diplomatic power and the relationship that
it has with the Nigerian government to assist South African
corporations and parastatals to become big players in the Nigerian
economy.

South African corporations and parastatals have become big players in
Nigeria

Prior to 1999, there were only 4 South African companies operating in
Nigeria [17]. This situation has dramatically changed with the
assistance of the South African state, and the signing of bi-lateral
agreements and the establishment of a Bi-National Commission. Today
there are now over 100 South African companies doing business in
Nigeria [18]. Within a mere 8 years, South African companies have
become major players in almost every sector of Nigerian economy.

The biggest investment by South African companies in Nigeria has been
in the telecommunications sector. In 2001, MTN was awarded a license
by the Nigerian government to operate a cell phone network in the
country. In return, MTN had to pay licensing fees of over US $ 285
million. Added to this, MTN has spent a further US $ 1 billion on
setting up its operations in Nigeria [19]. Currently, MTN is the
largest cellular network company in Nigeria and has over 10 million
subscribers [20]. This has seen MTN making massive profits in the
country. In 2004 alone, MTN recorded an after tax profit of over R 2.4
billion in Nigeria [21]. Such profits have led other South African
telecommunications companies to also set up shop in Nigeria in a bid
to get a piece of the very lucrative pie. This year, Telkom announced
that it was buying Multilinks, which operates a wireless network in
Nigeria, for US $ 200 million [22].

South African companies have also become dominant in Nigeria's
construction sector. Entech, a Stellenbosch based engineering company,
headed a consortium of South African companies that were awarded a
tender worth R 2.1 billion from the Lagos State government to
redevelop the Bar Beach and Victoria Island area outside of Lagos. The
idea is to turn the area into a complex akin to the V&A Waterfront
[23]. Another South African construction firm, Group Five, was awarded
a R 585 million deal to build a power station in Nigeria for the Ibom
Power company [24].

Many large South African companies have also invaded the tourism and
leisure sector in Nigeria. Under NEPAD, the South African parastatal,
the Industrial Development Corporation (IDC) has become one of the
largest investors in Nigeria's tourist sector. To date it has invested
over US $ 1.4 billion in tourism and telecommunications ventures in
Nigeria [25]. Another major player in the tourism sector is the South
African company Bidvest. Through its subsidiary, Tourvest, it has
purchased one of the biggest tourism companies in Nigeria, Touchdown
Travel. The biggest development in the Nigerian tourism sector,
however, is the massive Tinapa Project in the Cross River State. This
project falls under the auspices of NEPAD and has the full backing of
the South African and Nigerian governments. The project entails the
construction of a massive entertainment complex, consisting of 4
shopping centres, 5 bulk warehouses, 4 hotels, and a casino, and is
set to cost over US $ 300 million [26]. The major stakeholders in this
development are South African companies, such as the Standard Bank,
Tsogo Sun, Broll, Johncom and Southern Sun. Indeed, the centre pieces
of this development will be a 300 room hotel owned by Southern Sun and
a casino owned by Tsogo Sun. Another South African company, Broll,
will be the leasing agents of the complex. The South African state has
provided direct assistance to these companies so that they can carry
out this project. Indeed, the state owned IDC has provided finance,
and has underwritten these companies' investments in this project.

In the Nigerian retail sector, South African companies also loom
large. Massmart and Shoprite have opened a number of stores in
Nigeria. Added to this, Johncom has established a number of stores
selling books, CDs and DVDs in Nigeria [27]. A number of South African
companies have also entered into the fast food business, including
Famous Brands, St Elmo's and Nandos. In fact, South African companies
control almost 50% of the international fast food franchising industry
in Nigeria, and have out competed companies from both the European
Union and the United States. Considering that the fast food industry
in Nigeria is worth over US $ 2.5 billion a year, this control over
the fast food franchising business in Nigeria has meant that South
African companies have made super profits 28]. The South African
property management group, Broll, has also landed a deal to manage 594
retail fuel stations across Nigeria [29]. This deal too is worth
millions of dollars.

South African companies are also heavily involved in Nigeria's media
and entertainment sector. DSTV is a major force in the television
industry and accounts for 90% of the viewers that watch satellite TV
in Nigeria [30]. This has seen DSTV growing into the sixth largest
company listed on the Lagos Stock Exchange. Johncom has also eagerly
entered into the Nigerian entertainment sector. It has established
cinema complexes throughout Nigeria. One of these cinema complexes, in
Lagos, cost US $ 40 million dollars to develop [31]. Along with this,
Johncom has purchased one of the largest daily newspapers in Nigeria,
Business Day [32]. South Africa's parastatals have also ventured into
the entertainment industry. For example, Arivia.com was provided with
a contract worth R 140 million by the Nigerian government to assist
with the running of that country's lottery.

Since adopting NEPAD, the Nigerian state has been accelerating the
privatisation process in the country. South African parastatals have
been one of the major beneficiaries of this process. Indeed, through
its parastatals, the South African state has become directly involved
in accumulating capital in Nigeria. For example, as part of the move
towards privatisation, the Nigerian government provided Umgeni Water
with R 350 million contract to manage Port Harcourt's water services
for 3 years. At the moment, this contract could possibly be extended
to 20 years [33]. If it is extended, it would be a massive
money-spinner for Umgeni Water and the South African state.

As part of the privatisation of the energy sector, the Nigerian
government allowed the state owned ESKOM to buy a 51% stake in the
Nigerian Electric Power Authority (NEPA). With this, ESKOM received
contracts worth US $ 165 million from the Nigerian government. Eskom
has also entered into a partnership with Shell in Nigeria to upgrade
and operate gas powered power stations. The Nigerian government has
granted Eskom and Shell a US $ 540 million contract to operate power
stations in Port Harcourt [34]. It is very interesting that ESKOM, a
company owned by the South African state, wished to enter into a
partnership with Shell considering Shell's appalling human rights and
environmental record in Nigeria. Indeed, Shell has destroyed the
environment of the Niger Delta and has been directly responsible for
over 3 000 oil spills in that area since 1976. Added to this, Shell,
along with the Nigerian government, has been implicated in the murder
of over 2 000 activists in the Niger Delta since the 1980s [35].
Clearly, the South African government and ESKOM are not interested in
this; what they are interested in, however, is profit.

Prior to 1999, the Nigerian government awarded all of the oil
concessions in the country to companies from the United States, the
United Kingdom, France and Italy. As a result, companies from the
Northern imperial powers dominated Nigeria's oil sector. After 1999,
this situation began to change, in part because of the close
relationship that the new Nigerian government had, and has, with the
South African government. Companies from the Northern imperial powers,
although still dominant, no longer have a complete monopoly over the
oil concessions in Nigeria; companies from South Africa, China and
India have also got a piece of the action. One of the first actions of
Obasanjo's government in 1999 was to award the South African state the
right to market 50 000 barrels of Nigerian oil a day. In 2003, Thabo
Mbeki intervened to ensure that this was increased to 120 000 barrels
of oil a day. However, the South African government has selected to
pass on the rights to market this oil to a shadowy company, the South
African Oil Company, which is registered in the Cayman Islands. The
South African Oil Company in the Cayman Islands is 70% owned by a
Nigerian-American businessman, Jakes Lawal. Who owns the other 30%,
however, is a mystery [36]. Indeed, the Cayman Island law system
protects the identity of the shareholders that own the other 30%.
Lawal, however, has close connections with leading ANC figures. In
fact, the Mail and Guardian, reported that rumours have been
circulating that the ANC directly benefited from this deal. Indeed, it
is interesting that the Cayman Island's South African Oil Company also
has a sister company registered in South Africa. It is perhaps no
co-incidence that some of the shareholders in this sister company
happen to be leading ANC figures. These shareholders are:

• Nomusa Mufamadi, wife of Sydney Mufamadi
• Hintsa Siwisa, brother-in-law of the Eastern Cape Premier
• Miles Nzama, leading figure in the ANC Fundraising Trust
• and Brian Casey, a confidant of Penuell Maduna [37]

Other, more genuine South African companies have also enjoyed
receiving oil concessions from the Nigerian government. Ophir Energy,
owned by Tokyo Sexwale's Mvelephanda Resources, has been given the
right to drill for oil in several blocks in Nigeria. This is bound to
add to Ophir's current value of over R 14 billion [38]. The parastatal
PetroSA has also been given the right to drill in a number of oil
blocks. Added to this, PetroSA owns Brass Exploration Unlimited in
Nigeria. Through this company, PetroSA and the South African state
have a 40% interest in the Abana oilfield off the Nigerian coast.
Currently, the Abana oilfield is producing 22 000 barrels of oil a day
[39]. Some South African companies have also entered into partnerships
with well established multinational oil companies operating in
Nigeria. For example, SASOL has entered into a 50/50 partnership with
Chevron to develop a gas to fuel plant at Chevron's Escravos oil
terminal [40]. This plant will cost US $ 1.3 billion and is planned to
come on line this year [41]. It will initially produce 33 000 barrels
of fuel a day, but this will be increased to as much as 120 000
barrels a day over the next 10 years [42]. A number of South African
firms have also become involved in providing services to the oil
multinationals in Nigeria. Most notably, Grinaker established an
oil-rig fabrication yard in Port Harcourt in 2000. It assembles and
services the oil rigs that multinational oil companies use in the
Niger Delta at that facility [43].

The Nigerian people have not benefited from South Africa's expanding
investment

Despite all this investment, the people of Nigeria have not benefited.
This is partly because South African corporations operating in Nigeria
are allowed to repatriate the profits that they make out of Nigeria.
Added to this, many of Nigeria's economic sectors have become
completely foreign owned, which has had negative implications for the
country's sovereignty. The majority of South African corporations also
source most of the products that they use or sell in Nigeria through
South Africa and not locally. This means they operate in an enclave
and do not promote the creation of up stream or down stream industries
in Nigeria. South African companies operating in Nigeria have also
created very few jobs. The jobs that they have created have tended to
be casual. At many South African owned companies in Nigeria, workers
have been denied the right to join trade unions [44]. For example,
despite its massive profits, MTN has only created 500 permanent jobs.
Most of its employees are casual or temporary workers, and it has
denied all of its workers the right to join a trade union [45].

South African companies have also been involved in blatant
profiteering and looting in Nigeria. Indeed, MTN charges the highest
rates in the world for cellular phone calls in Nigeria [46]. Along
with this, some South African companies have implemented heavy handed
tactics to recover revenue owed to them by Nigerian consumers [47]. In
fact, ESKOM/NEPA has hired 10 South African companies to collect the
debt that it was, and is, owed by Nigerian consumers . Some South
African companies have even been involved in, or were complacent in,
human rights abuses in Nigeria. For example, in 2005 there was a
community protest outside of the Escravos oil terminal where Chevron
and SASOL are establishing their gas to fuel plant. Representatives of
these companies at the Escravos oil terminal called in Nigerian
security forces to break up the demonstration. On arrival, the
Nigerian forces opened fire on the crowd, killing one person and
injuring a further 30. Some of the protesters were then severely
beaten with rifle butts and other weapons. Added to this, access to
the healthcare facilities at the Escravos terminal was denied to the
injured protesters. The result was that it took several hours for the
injured protesters to find their way to a hospital [48].

Conclusion

From the above, it is clear that the ruling party in Nigeria has
served the South African capital and the state's interests well. It
has facilitated the process whereby South Africa has become a major
economic player in Nigeria in only 8 years. Indeed, South Africa has
joined the older imperial powers in looting Nigeria's resources and
dominating its economy. It is, therefore, no wonder that the South
African government immediately offered its congratulations to
Obasanjo's hand picked successor, Yar' Adua' directly after the
elections. Indeed, Yar' Adua has vowed to continue with the Obasanjo's
policies, and inevitably this will include serving South Africa's
interests well in Nigeria; even to the detriment of the Nigerian
people. For as long as Yar' Adua carries out policies that favour
South African capital and the state, he can count on the backing of
the Africa's own imperial power, South Africa.

For references, see link below.

* Shawn Hattingh Works for ILRIG in Cape Town

* Please send comments to editor@,  or comment online at
http://www.pambazuka.org/
REFERENCES

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