Economic dispute between Nigeria, South Africa still unresolved

Africa's two economic giants are trying to patch up their frayed relations, but a long-anticipated high-level visit has failed to solve the business disputes that have damaged investment and trade between Nigeria and South Africa.

The friction between the continent's two biggest economies has come to symbolize the trade obstacles that have hobbled Africa's growth. And the biggest dispute – Nigeria's shocking decision to impose a $3.9-billion (U.S.) fine against South African cellphone company MTN – is still far from being resolved.

There were hopes that South African President Jacob Zuma could ease the conflict during his visit to Nigeria this week. But after his meeting with Nigerian President Muhammadu Buhari on Tuesday, there were no signs of progress, and Mr. Buhari upped the stakes by adding a serious new allegation against MTN.

Mr. Buhari, addressing the MTN controversy for the first time, said the South African company was "very slow" to disconnect millions of unregistered SIM cards that terrorists could use to evade scrutiny, and this "contributed to the casualties" inflicted by the Islamist radical militia Boko Haram. In effect, he was accusing MTN of making it easier for Boko Haram to kill people. Mr. Buhari said the cellphone company was negotiating with Nigerian regulators in an attempt to reduce the $3.9-billion fine and to be "given time to pay gradually."

MTN has already paid $250-million towards the fine as a "good faith" gesture. But its profits and share price have dropped dramatically since the fine was announced last October.

Mr. Zuma's visit to Nigeria, which included a speech to Nigeria's national assembly on Tuesday, is a key step towards rapprochement between the two feuding powers after years of conflict. But while South African investors complain of deliberate harassment by Nigerian authorities and other headaches ranging from currency controls to import restrictions, the Buhari government seems to have a different priority: it is demanding South African military help for its fight against Boko Haram.

Nigerian media, quoting senior Nigerian defence officials, said on Tuesday that the Zuma government had promised to send South African special forces and military equipment to Nigeria to help supply and train the Nigerian army for its battle against Boko Haram. The defence officials also want South African help in modernizing the Nigerian defence industry. Yet there was no announcement of any deal on Tuesday and no mention of it by South African officials.

The Nigerian media and politicians, meanwhile, continue to criticize South Africa for allowing "xenophobic" violence against Nigerians and other foreigners in South Africa. Relations between the two countries fell to a new low last year, when senior Nigerian diplomats were pulled out of South Africa in protest against the Zuma government after an outbreak of xenophobic attacks in South Africa.

On Tuesday, at the first press conference of Mr. Zuma's visit, Nigerian journalists questioned him about the xenophobic violence, and he pledged to address the problem. Shehu Sani, a Nigerian senator, said on Tuesday that the Zuma government must "intensify" its efforts against xenophobia.

Even before Mr. Zuma's visit, Nigerian foreign affairs minister Geoffrey Onyeama admitted there was "tension" in the relationship between the two countries. "I hope this visit will calm the tension," he told a Nigerian news agency.

A range of South African companies – including grocery chain Woolworths, dairy producer Clover, property developer Resilient, fashion retailer Truworths and food producer Tiger Brands – have withdrawn from Nigeria or slowed their expansion because of difficulties in doing business there.

Other South African companies, including hotel chain Sun International and satellite television company Multichoice, have been targeted by the Nigerian authorities for arrests or investigations.

"It's terrible there," Clover chief executive Johann Vorster told South African media this month after halting the company's Nigerian expansion plans. "We were not able to access currency. We could not buy milk. Packaging was difficult."