Xenophobia: MTN, Stanbic IBTC, other MTN, Stanbic IBTC, firms face pressure in Nigeria

Xenophobia: MTN, Stanbic IBTC, other South African firms face pressure in Nigeria

South African companies with identifiable business interests estimated at about N20.43 trillion in Nigeria are facing growing uncertainty as pressure mounts on the Federal Government to take stronger action over renewed xenophobic attacks against Nigerians in South Africa.

The renewed violence has triggered calls for economic retaliation, with lawmakers, student groups and other stakeholders urging the government to consider measures against South African businesses operating in Nigeria.

The calls followed reports of attacks on foreign nationals, killings, looting of businesses and the displacement of Nigerians in different parts of South Africa.

The Federal Government has so far focused largely on diplomatic engagement and measures to protect Nigerians in the country, including the evacuation of 1,490 Nigerians from South Africa in five phases between June 10 and July 15.

Nigeria has also continued to press South African authorities to strengthen protection for Nigerians and other foreign nationals and ensure that those responsible for attacks are brought to justice.

The latest dispute has, however, renewed scrutiny of the extensive South African investments in Nigeria, which span telecommunications, banking, insurance, retail, hospitality, logistics, aviation, manufacturing and property-related businesses.

The estimated N20.43tn figure is based largely on publicly available market capitalisation, asset and property valuations of major South African-linked businesses operating in Nigeria. It should not be interpreted as the precise value of South Africa’s foreign direct investment stock in Nigeria.

Calls for retaliation

Pressure for economic retaliation intensified after South African authorities ruled out compensation for Nigerians who abandoned businesses and properties during the latest wave of xenophobic violence.

Senator Adams Oshiomhole called on the Federal Government to consider appropriating profits made by South African companies operating in Nigeria if South Africa failed to compensate Nigerian victims.

Oshiomhole argued that Nigerian authorities should explore stronger economic measures to protect the interests of citizens affected by xenophobic attacks.

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The proposal, however, has not become government policy, while the Senate subsequently rejected the idea of using profits from South African companies in Nigeria to compensate victims.

The National Association of Nigerian Students (NANS) has also threatened protests against major South African-linked businesses, including MTN and MultiChoice, in response to the attacks on Nigerians.

The growing calls have raised concerns about whether the diplomatic dispute could eventually spill into Nigeria’s business environment.

Nigerians killed in South Africa

The renewed violence has also resulted in deaths.

Among those killed were Amaramiro Emmanuel and Ekpenyong Andrew, who died in separate incidents in April.

Two other Nigerians, Emeka Iroegbu and Musa Joe, were reported killed in separate incidents on June 28.

By late July, reports indicated that at least four Nigerians had been killed during the latest wave of violence, while Nigerian officials said many more Nigerians had suffered harassment, intimidation, property losses and other forms of abuse.

The Nigerian government subsequently intensified its response, including the voluntary evacuation programme that returned 1,490 Nigerians from South Africa.

The evacuation was coordinated through the Ministry of Foreign Affairs, the Nigerian High Commission in Pretoria, the Nigerians in Diaspora Commission and other government agencies.

South African businesses in Nigeria

South Africa’s commercial presence in Nigeria extends well beyond the brands most familiar to consumers.

The most prominent South African-linked companies listed on the Nigerian Exchange are MTN Nigeria Communications Plc and Stanbic IBTC Holdings Plc.

MTN Nigeria is one of the largest companies on the Nigerian Exchange by market value, while Stanbic IBTC is a major player in Nigeria’s banking and financial services industry.

Other South African-linked interests in Nigeria include Rand Merchant Bank, Sanlam, Alexander Forbes, Broll Property Group, Metrofile, PEP, Mr Price, Pick n Pay, Nampak and businesses associated with the hospitality, aviation and manufacturing sectors.

Some companies commonly described as South African businesses have, however, undergone ownership changes over the years.

For instance, Protea Hotels, which has South African origins, is now part of Marriott International’s global hotel network. Some Nigerian operations also involve local investment partners.

This makes it necessary to distinguish between companies with South African origins, companies controlled by South African parent groups and businesses that still have substantial South African ownership.

How the N20.43tn figure was calculated

The estimated N20.43tn value of South African-linked interests in Nigeria is largely derived from the market values and publicly available asset information of major companies.

MTN Nigeria and Stanbic IBTC account for the bulk of the figure when their respective market capitalisations are considered.

However, market capitalisation should not be treated as the amount of money invested by a foreign parent company.

Both MTN Nigeria and Stanbic IBTC are publicly listed Nigerian companies with shares held by Nigerian and international investors.

Consequently, any action targeted at the companies could affect not only South African interests but also Nigerian shareholders, pension funds, employees, customers, suppliers and government revenues.

Nigeria maintains diplomatic pressure

Despite the growing calls for retaliation, the Federal Government has continued to pursue diplomatic channels.

South African International Relations and Cooperation Minister Ronald Lamola visited Abuja as President Cyril Ramaphosa’s special envoy amid efforts to ease tensions between the two countries.

The discussions focused on the safety of Nigerians and other foreign nationals in South Africa, migration issues and the broader state of Nigeria-South Africa relations.

Nigeria has maintained that South Africa must do more to prevent xenophobic attacks and protect Nigerians legally resident in the country.

South Africa, for its part, has reiterated its opposition to xenophobia, racism and discrimination while insisting that criminality should not be associated with nationality.

The dispute has also generated concerns over compensation for Nigerians who lost businesses and property while fleeing the violence.

South African authorities have rejected calls for government compensation, arguing that the state cannot compensate individuals for private property abandoned during the unrest.

Economic stakes for both countries

Any decision by Nigeria to retaliate against South African companies could have consequences for both countries.

MTN Nigeria, for example, provides telecommunications services to millions of Nigerians and employs thousands of people directly and indirectly through its wider supply chain.

Stanbic IBTC also has a significant presence in Nigeria’s banking, investment and financial services sectors.

Any disruption to their operations could therefore affect consumers, workers, shareholders, suppliers and government tax revenues.

South Africa also has significant economic interests in Nigeria, making the relationship important to businesses in both countries.

The situation has consequently placed the Federal Government in a difficult position: responding firmly to xenophobic attacks against Nigerians while avoiding measures that could undermine jobs, investments and economic stability at home.

For now, Nigeria appears to be relying on diplomatic pressure, consular intervention and the protection of affected citizens rather than imposing broad economic sanctions.

But as calls for retaliation continue to grow, the future of South African investments in Nigeria could become a major factor in the increasingly tense relationship between Africa’s two largest economies.

Xenophobia: MTN, Stanbic IBTC, other South African firms face pressure in Nigeria