Violent protests, including assault, vandalism and looting, against some South African owned businesses in Nigeria last week, brought incalculable losses to various sectors of the economy with many stakeholders warning that unless urgent steps are taken to checkmate an escalation in the days ahead, the shock may further weaken growth and employment statistics by the end of the year.
Nigeria, a mono-product economy is currently hedged in various sectors by some big South African multinational companies including MTN, Shoprite stores, Stanbic IBTC, Rand Merchant Bank, Multichoice, and PEP Retail Stores among others with concerns in some quarters that the country may end up the losers in a worse case scenario where the rainbow nation enterprises in Nigeria are forced to leave.
Although Nigeria’s Foreign Affairs Minister, Geoffrey Onyeama, had allayed fears last week the country was not considering severing bilateral relationship with South Africa, the anxiety already created by the recent days of hostilities in both countries is sure to lead to major reviews in existing and potential investment opportunities.
Onyeama had on Wednesday told State House correspondents after meeting with President Muhammadu Buhari and Vice President Yemi Osinbajo at the Presidential Villa, Abuja, that the government had decided to withdraw from participating at the World Economic Forum (WEF), holding in Cape Town, South Africa.
But despite the Federal Government position on WEF, some governors and business elite still went ahead to attend.
Among those sighted in South Africa in readiness for the forum were the governors of Ekiti and Kaduna as well as some Nigerian business elite which many believe was an indication of how important the South African economy is to Nigeria.
Already Consul-General of the South African High Commission, Mr. Darkey Africa, had put official trade volume between both countries at $60 billion, an indication that continued reprisal attacks against South African interests in Nigeria in the days ahead would be counterproductive to the economy with many jobs and other economic resources likely to be lost in the process.
Only last week in the wake of the xenophobic hostilities, market capitalisation of MTN shares Nigeria recently listed on the floor of the Nigerian Stock Exchange (NSE), dropped by as much as N41 billion in just three consecutive trading sessions.
Analysis by Daily Sun revealed that MTN shares, which opened at N140 per share and N2.849 trillion in market capitalisation at the beginning of trading on Wednesday lost about N30 billion or N1.07 per share to close at N138.50 per share and N2.819 trillion in market capitlisation at the close of the market.
Similarly, at the close of trading on Thursday, the telecom firm also shed N10 billion or 45 kobo per share to close at N138.05 per share from N2.819 trillion in capitalisation to N2.809 trillion, while Friday’s session saw its shares drop marginally by 0.5 per cent to close the week at N138, bringing its cumulative loss to N41 billion.
Speaking on the development via a telephone chat, Managing Director, Afrinvest Securities Limited, Ayodeji Ebo, said there was no cause for alarm, but added however that the trend may not be sustained in the long run. “It may be some form of reaction to the crises, but there is some level of calmness now, so we do not expect that to be sustained. We feel that some investors may be very wary of the situation but for now it is under control.
MTN is well established and so has important stakes in Nigeria as well as on the floor of the Nigerian Stock Exchange (NSE) in terms of productivity, job creation and with its 60 million Nigerian subscribers, there is really no cause for alarm. I feel that activities in terms of the volume of transactions is increasing as investors are using that as an advantage to buy the stocks. So it will not be a trend that will be sustained”.
For his part, National President, Constance Shareholders Association of Nigeria, Shehu Mikail, said that the shares of the telecom company fell after the company closed its offices in Nigeria following attacks on its premises in three cities. He therefore called on both countries to take proactive steps towards restoring the inflow of investments.
“It was due to panic that made investors to embark on sell pressure, the situation is not good for investment in Nigeria. My advice is that both the governments of South Africa and Nigeria should take proactive action to stop these attacks to enable inflows of investment in both countries,” he said.
In the same vein, Jide Awe, an ICT expert said,”There are certainly severe implications for IT services, jobs, banking and tech enabled services due to dependence on telecom considering that MTN is the biggest service provider. The impact really depends on how long they plan to close their offices in Nigeria. If it isn’t for too long I expect the impact won’t be too severe and will be limited, but if the situation persists, it would have implications for digital inclusion which will certainly hamper the nation’s digital development.
Already the infrastructure situation needs to be improve so taking out one of the major service providers will certainly widen the digital gap if it is going to be a long term absence.
Awe added that the situation if not properly and swiftly resolved would result to job losses . “In addition to digital inclusion, there are direct and indirect jobs as well as business opportunities (ICT and ICT enabled and the spillover and spinoff effects) that would be lost in the long run.”
Similarly, the President/CEO InfraFocus Technologies Limited, Oladipo Raji, condemned the attack on MTN offices and other South African businesses in the country. He said, “It is very wrong and definitely not the right way to handle this kind of situation. Two wrongs don’t make a right. There are many ways to handle it and the government should rise to its responsibility because it owes Nigerian in South Africa protection and to do this, the two countries must work together. Again the South African police should rise up to its duty and protect Nigerians over there; if they cannot do it let our government do the right thing.”
On impact of the shutdown on IT services, Raji explained that, “The good thing is that IT services are virtual. So, the closing down of MTN shops does not affect the operations. The only impact is on revenue. The daily revenue will drop because most of the shops are used to provide services that are not virtual like selling of SIM cards. Otherwise most of their services are online.
So in other words, the impact for now is small but if this continues and not addressed promptly, people will begin to lose their jobs and if this happens, it is Nigerians that would be affected.” Awe concluded.
For his own part, Ajibola Olude, Executive Secretary, Association of Telecommunications Companies of Nigeria (ATCON), lamented that MTN’s closure of its shops affected some of its operations which if continued will not be good for the country.
Olude explained that the closure had already led to a crash in MTN share value. “Recently MTN Nigeria was quoted on the Nigerian Stock Exchange and before this xenophobia issue, its shares were doing exceptionally well. But with this ugly development which is not caused directly by the company, its share value on the exchange and the strong confidence which MTN shares have been enjoying may be affected negatively.”
He added that, if the two countries can quickly come together to tackle the problem it may not necessarily lead to job loss but if they fail to, the impact would not be good for all stakeholders.
However, it should be noted that the impact of the reprisal attacks on South African businesses cuts across all sectors of the economy, as insurance companies acknowledged that after the whole incident, Nigerian underwriters would have to indemnify all South African companies with current policies whose facilities were destroyed in the wake of the crisis.
Ekerete Gam-Ikon, an insurance expert, said, “Indeed, claims reported from incidents like these are part of the business. Affected policyholders will file claims and if their policies had RSCC, they will be processed and settled.
The insurance industry in Nigeria has a responsibility to ensure policyholders are protected at all times but more especially at this time when “looters” had a field day even when no one saw it coming.
Another executive in an insurance company who pleaded anonymity pointed out that claims will arise from reprisal attacks and it will affect some insurance firms who insured those companies that were affected. However, it depends on the kind of policy they obtained. If they obtained policies that involve business interruption, they will make claims and the insurance firms will have to pay them.
Meanwhile, workers in telecommunications sector including MTN Nigeria, have pleaded with Nigerians to stop reprisal attacks on their facilities as well as those of other South African business interests in Nigeria. The workers under the aegis of Private Telecommunications and Communications Senior Staff Association of Nigeria, (PTECSSAN,) and its MTN Branch, called on the Nigerian Government and its South African counterpart to expedite actions in genuinely exploring all diplomatic measures to nip the sad, weird, unfortunate and disturbing trend in the bud before it destroys the age long diplomatic relationship between both countries.
In a statement signed by the General Secretary of PTECSSAN, Okonu Abdullahi and PTECSSAN MTN branch Chairman, Elisha Adamu, the workers said among others, “The barbaric attacks on Nigerian lives and livelihoods by South Africans started about two years ago and the South African Government failed to take proactive and preventive measures to stem the ugly tide. It is beyond releasing presidential statement condemning the dastardly acts without punitive action against the organisers and perpetrators of these attacks on Nigerians and other Africans in the country.
“The right of Africans to live peacefully as law abiding residents in any country on the continent must be respected.
South Africans should not be oblivious of the immense contributions of Nigerian Government and its people to the anti- apartheid struggle for their liberation when over $10.5million was donated to the South Africa Relief Fund by Nigerian workers and Students. “While we condemn in its entirety the barbaric actions of the South Africans, we must not fail to do same against the reprisal attacks on MTN Nigeria and other South African business interests in Nigeria. We understand the pain and frustration of our people because of xenophobia going on in South Africa but we must not as a people succumb to the temptation of reprisal as this will be tantamount to stooping so low to the level of the South Africans. We must know that any reprisal attack is uncivilized and will be counterpart productive, hence, condemnable.
“It must interest Nigerians to note that majority of members of Board of Directors of MTN Nigeria and other South Africa business interests in Nigeria are run by Nigerians who have contributed immensely and still contributing to the growth of this country in their various fields of endeavour. “Also, workers in MTN Nigeria and other businesses of South Africa origin are Nigerians not South Africans. Therefore, those involved in the reprisal attacks must have a rethink and refrain from further attack in the interest of our economy and well being. It is irrational for Nigerians to attack Nigerians, their means and places of livelihood. Nigeria is currently battling with high rate of unemployment and any act capable of worsening the surly and pitiable situation must be condemned, discouraged and resisted by all and sundry. “We call on Federal Government to rejig its foreign policy to focus more on the welfare of Nigerians irrespective of where they reside in the World to curtail further vilification and attack on her citizens. It is beyond dispatching of special envoy to South Africa though it is commendable. Also, commendable by Nigerian government are the recall of its High Commissioner to South Africa and withdrawal from participation at the forthcoming World Economic Forum for Africa in the country.
Nigerian government can also take a step further in showing its grievance by expelling from Nigeria some selected and high profile South Africans. “Furthermore, it is high time Nigerian government looked into reasons for exodus of Nigerians to South Africa and other countries of the world in order to address them.
Above all the economic hardship and high rate of insecurity in the land are some of these reasons and must tackled headlong.