I had the misfortune of walking through a South African owned shop in Lagos recently. Mr. Price to be precise. I had just returned from a trip to Johannesburg and looking for cheap gifts i had forgotten to pick up for my hangers on when i returned. There was a piece of sweat shirt I had made a mental note to purchase at Mr. Price and decided to get it at the Nigerian store. This was a piece of item placed at their “priced to go” racks at N1,800 (R114.74) per piece. I have a long, retentive memory and i could still recall that this same piece of sweatshirt sells for N784.24 (R49.99) in South Africa. And if you factored in my 14% tax rebates, that sweat shirt did in fact come to me at N669.34 (R42.99). That’s some 269% increase over and above the marked prices inside South Africa. This huge price differential is typical across board on most south african owned consumer products in Nigeria. From Shoprite to Chicken Republic to Massmart (Game), Mr. Price, Woolworth and Truworths. It is a tale of undue exploitation of Nigerians by South African Businesses. Before i am crucified for being xenophobic, it is important to understand that the criticism of South African companies have persisted as a consequence of their approach to business in Nigeria, which has often been characterised as predatory and mercantilist. South Africa’s foreign policy towards Nigeria and indeed, towards all of Africa is not based on any Pan-Africanism or anti-imperialism; it is rather based on promoting South Africa’s expanding business interests on the continent. It is an expansionist agenda that South African corporations and parastatals have successfully implemented in a one-sided hegemonic relationship. As echoed by Foluso Phillips, the chairman of Lagos-based Phillips Consulting, a business consultancy of branding advisors, “There is much that South Africa can offer Nigeria, but there has been a problem of attitude and lack of trust as well as divergent objectives by both parties,… however, there must be a strong spirit of win-win, as the track record and perception makes it all look one-sided in South Africa’s favour.”
Believe me, I am a fan of South African business in Nigeria. Rightly or wrongly, the economic boosts our country has experienced in various sectors of the economy, in particular, retail and telecommunication, through the interventions of South African businesses have helped to redefine the consumer experience here. They have brought healthy competitions and quality alternatives to other product offerings. They have been open about their desire to conquer the consumer market and have in turn created employment opportunities for thousands of Nigerians. They saw the potential of the middle income groups in Nigeria and positioned themselves to tap into it.
My grouse however, is that this competitive positioning cannot and should not be exploitative in nature, which is exactly what is happening today. It shouldn’t happen in a market of 170 million people in which, 40% of the population describe themselves as middle income earners.
This target group alone represent a market that’s still larger than the entire population of South Africa! Worse still, this should not be happening in a country that allows businesses to repatriate 100% of entire profits back to home. And it definitely shouldn’t be happening in a country that has massive disparities in incomes with it. Some comparative economic data will suffice here:

Nigeria Population: 170 million South Africa 52 million
Gross Domestic Product:$268.7 billion $375.9 billion
GDP per Capita $1,657 $7,257
Exports (1st Quarter, 2012) $750 million . $150 million


How does it happen that the earning power of the average south african is more than 4 times that of his Nigerian counterpart and yet, Nigerians are made to pay almost 3 times for the same quality of goods. The reality is, South African companies are making a dangerous killing in Nigeria and we are helpless to do anything about it. There is evidence that South African companies have been involved in blatant profiteering and looting in Nigeria.
For a very long time, MTN charges in Nigeria were the highest rates in the world for cellular phone calls. And despite its massive profits, MTN has really only created about 500 permanent jobs. Most of its employees are casual or temporary workers, and just like other South African corporations, denies all of its workers the right to join a trade union. Something that would be most unheard of in their own country.
And do not be deceived by the trade surplus in Nigeria’s favour. Of the 750 million dollars worth of Nigerian exports to South Africa reported in the first three months of 2012 by The South African Revenue Service, 740 million dollars worth are made up of mineral products, mainly oil. That means, other than oil, Nigeria have absolutely no stake in South Africa’s economy.
Compare that with MTN owning 52% of Nigeria’s mobile telecommunications market; franchises like Nandos, Chicken Republic and St. Elmos, etc owning 50% of the international fast food market worth US$2.5 million per annum; DSTV accounting for 90% of the viewers that watch satellite TV in Nigeria; SASOL playing major roles in Escravos with Chevron; and Entech and Broll managing prime estates and properties including the development of the Bar Beach (Eko Atlantic) and management of over 600 fuel stations and malls across Nigeria respectively. This can’t healthy.
There is a reason why such unequal trade relations exist between Nigeria and South Africa. The bilateral agreements signed by both governments since 1999 allows this to happen without hinderance to operations. South African companies’ investments in Nigeria are heavily protected from any interference at any level by the Nigerian government. It is a license to grow as they please without consequence. Added to this, there are substantial tax rebates for companies operating here through agreements on eradicating double taxation.
South African companies that paid tax in Nigeria are protected from paying taxes back home and can repatriate the entire profits. Now, imagine the US$5.3 billion MTN had earned after tax in the 10 years of operation from 2001 – 2011 finding its way back to the South African economy tax free! Why wouldn’t the Rand be stronger than the Naira at any level?
When the foundations of this country was laid in the fight against imperialism, it was not envisioned to have it substituted with another form of neo-colonialism. The activities of South African businesses in Nigeria have been abrasive to Nigerians and the Nigerian economy.
There is a siege mentality they have on this country that needs to be addressed. They have created opportunities not to develop the Nigerian economy but to exploit its resources. We experienced that with the British, endured it with the Chinese and now, it’s the South Africans that are our new colonialists. This is not the sort of relationship we should be aspiring to at this time. The sooner our government addresses these imbalances the better.

Souce: http://www.news24.com/MyNews24/SA-ripping-Nigeria-off-20130624

I don't blame them one bit! If you see an adult that should know better acting like a complete retar/d.....a mugu, you're free to sit on his shoulders for a free ride! After all what's stopping us from having our own 'shoprite' and 'Mr Price'?......esp' when you consider all the thieving politicians, ex head of states, ex military looters, and gov't contractors that have idle billions of dollars stashed away in foreign banks.

Serves us right!

Because the people who can afford to patronise those shops everyday pluck money from trees without doing anything. ........joking

Probable reason
The cost of doing business.
The lack of electricity
space constraint in Lagos
absence of competitors and limited choices
cost of shipping goods through nigerian ports,
cost of clearing etc
have to be factored into the price of the good.

For example in SA, you do not have to pay for diesel to run a generator. The manager of the complex will always include this extra expense on their lease.

bloggernaija: Because the people who can afford to patronise those shops everyday pluck money from trees without doing anything. ........joking

P

^^^Another good point!

Whats the alternative? mr op? Nigeria needs the services /business that SA provides. we need the goods and management expertise.since most western country with similar expertise are weary of investing in nigeria. Dont forget that these south african companies believed in the Nigerian market when others do not by putting their money down to invest and=grow the nigerian market.
Today seeing the profit that MTN is making in nigeria, most western telecom now see the nigerian telecom market as viable these wasnt the case a decade ago. remember that SA believed in Nigerian market when the west did not.
Western contries are only interested in investing in the oil sectors of our country but the south africans are investing in the non oil sector which is the area that we really need a lot of investment.
The rule of thumb for corporations is to invest money where they can make profit. The nigerian market must remain profitable for SA corporations if they must invest in nigera.
And we need those investments!

yes, you've spoken well, I think the bone of contention is that, Nigeria govt should enact policies that will reflect substantial financial effect of its citizenry from these foreign investment

comment from the news24 article.

Hi Christian - I'm not going to
defend SA in any way, but just want
to point out that unfortunately your
grasp of macro-economics is
functionally non-existent.
Furthermore, having extensive
experience with operations across a
number of sectors in Nigeria, I can
tell you that there are a number of
additional costs associated with
doing business in Nigeria: these
include lack of infrastructure, lack of
power, 'sharp' business practises of
local business people, VERY high
corruption, lack of professional skills,
immature stock and capital markets
(costly to raise funds and/or credit
facilities), non-payment culture, high
stock shrinkage in retail
operations...etc. All these costs,
together with the country risk
premium (14% for Nigeria vs 6.5%
for SA) means SA firms have to
charge significantly more to get the
same ROE from the Nigerian market
as they would in the SA market.

As SA corporations establish and grow the nigerian market,local bussiness will learn and improve their skills and may be decades from now they might provide competition to SA firms or better still find more efficient ways of doing bussiness that might help reduce cost for ordinary nigerian.
remember with the entrance of MTN to the telecom also came the Globalcom which has also found its foot in the nigerian telecom market.
So SA investment no matter how lopsided it might be is a win win for nigeria.

I think this author entirely missed out the issue of operating costs in the first place. Like someone mentioned in one of the comments above me, there could be more economic and operating bottlenecks for SA companies here in Nigeria than in their country. Not ruling that out, I put the blame on the successive government for killing off our local Nigerian companies of the 70's, 80's and 90's. If these companies had been nurtured till date, we won't be blaming South Africa or even the Chinese. Our successive governments were silly enough to cripple the economy by stagnating the power and telecommunication sectors, completing ignoring our public infrastructures, encouraging corruption on a grand scale and lastly, allowing the importation of everything and anything, including matches and toothpick. Building and sustaining a brand isn't easy and exporting it to neighbouring countries is very risky. Isn't it disheartening to know that more of than 85% of our local companies operating outside Nigeria are service-based e.g Banks and Telecomms? This simply shows that we have almost zero industrial capacity in Nigeria. This is where our problem lies and the solution should start from there. Let us stop blaming SA for trying to give us what we don't produce in our country. I rest my case...

zetdee: comment from the news24 article.

Hi Christian - I'm not going to
defend SA in any way, but just want
to point out that unfortunately your
grasp of macro-economics is
functionally non-existent.
Furthermore, having extensive
experience with operations across a
number of sectors in Nigeria, I can
tell you that there are a number of
additional costs associated with
doing business in Nigeria: these
include lack of infrastructure, lack of
power, 'sharp' business practises of
local business people, VERY high
corruption, lack of professional skills,
immature stock and capital markets
(costly to raise funds and/or credit
facilities), non-payment culture, high
stock shrinkage in retail
operations...etc. All these costs,
together with the country risk
premium (14% for Nigeria vs 6.5%
for SA) means SA firms have to
charge significantly more to get the
same ROE from the Nigerian market
as they would in the SA market.

this was the same factors MTN and econet claimed when they were billing us per minutes instead of per seconds until globalcom proved them wrong,am not against the SA businesses in Nigeria,but their level of extortion is killing,
BTW am not a fan of foreign investment either,government should just give us power,security,and a good transport system,and see what the magic Nigerians can do,the developed economies of today did not develop with FDIs,USA,china,Japan,Korea western European nations where all developed through a healthy competition between the cities that made up most of this countries,FDIs always comes in when the economy is stable and profit can be taken off the host country.Nigeria economy is stable right now but if we remain the way we are rightnow,we will be in deep trouble in the next 2 to 3yrs.Japan is one of the most developed country in the world but nobody is investing there,have anyone asked why?

readonenaire: yes, you've spoken well, I think the bone of contention is that, Nigeria govt should enact policies that will reflect substantial financial effect of its citizenry from these foreign investment

Which Government?

Our Government is preoccupied with more important matters

We need to get our acts right as a country ASAP!!!

@op - the Nigerian government impose exorbitant taxes on them, aside that, this shops settle other expenses and profit still has to be made. I don't agree they're reaping Nigerians off.. It's business

.

readonenaire: yes true... I denounced Nigeria a long time ago , in as much that we are ready to make sacrifices to help our fatherland, where does the motivation comes from, someone owning 500billion dollars stashed away in foreign reserve w/o working

If you denounced your country, Why are you commenting on issues affecting it? Nijas problems no longer affects you , my advise is for you to concentrate on issues bothering whatever ur adopted country is.
and by the way, other people built, and made sacrifice for your adopted country to be at the comfortable level it is at the moment for fools like you to claim.
cowards like you would rather run away and claims the sweat of others rather than sweat to make your country viable.

I think that it is false to say that Nigerians are being ripped-off. A year or two ago I compared prices of SA companies in Nigeria with prices in SA and they were slightly higher on average in Nigeria. I can't remember the thread that I posted in. Anyway, in SA DSTV premium costs R625, compact costs R275. Compare that to Nigeria. Last time I checked R1 gave N16.

Or best check Mr Price items and compare with the one in Nigeria. www.mrp.com

paniki: I think that it is false to say that Nigerians are being ripped-off. A year or two ago I compared prices of SA companies in Nigeria with prices in SA and they were slightly higher on average in Nigeria. I can't remember the thread that I posted in. Anyway, in SA DSTV premium costs R625, compact costs R275. Compare that to Nigeria. Last time I checked R1 gave N16.

Or best check Mr Price items and compare with the one in Nigeria. www.mrp.com

Wow.. It's 16 now.. From 25! I think the EU economic challenges is affecting SA badly

oops

Tony Spike: I think this author entirely missed out the issue of operating costs in the first place. Like someone mentioned in one of the comments above me, there could be more economic and operating bottlenecks for SA companies here in Nigeria than in their country. Not ruling that out, I put the blame on the successive government for killing off our local Nigerian companies of the 70's, 80's and 90's. If these companies had been nurtured till date, we won't be blaming South Africa or even the Chinese. Our successive governments were silly enough to cripple the economy by stagnating the power and telecommunication sectors, completing ignoring our public infrastructures, encouraging corruption on a grand scale and lastly, allowing the importation of everything and anything, including matches and toothpick. Building and sustaining a brand isn't easy and exporting it to neighbouring countries is very risky. Isn't it disheartening to know that more of than 85% of our local companies operating outside Nigeria are service-based e.g Banks and Telecomms? This simply shows that we have almost zero industrial capacity in Nigeria. This is where our problem lies and the solution should start from there. Let us stop blaming SA for trying to give us what we don't produce in our country. I rest my case...

Oil, bauxite, gold, diamonds, gas, uranium, agro products...,Are in nigeria but 80% are still starving

But some nigerian fools continue to die at sea trying to reach Europe where they get subjected to modern day disgust treatment and sex slavery.

Nigerian women get dragged by white men across oceans to play the roles of sex slaves, Nigerian are so hungry and the FG governments are sucking up to Rhodesians and white South Africans to move to the shithole call nigeria to work the land and feed the lazy hungry nigerian people, why can't these human prototypes who die at sea and those who are involved in scams, drug and prostitute...work the land and feed themselves and the general population?

The white south african and chines are in nigeria to steal and feed starving weakminded and lazy nigerian who cannot fight for democracy, feed themselves or smart enough to start something and make use of all the abundant recouses the land has been lying fallow for decades whilenigeria were all over the show carrying begging bowls begging for food and kissing anybody ass with dollars. If this is the price Nigerian have to pay for their involvenent in slave trade descendants of slaves can sit back and laugh out very loud.

The curse of ham can be seen in the laziness and weakminness of Nigeria and that is not about to change, not in this lifetime.

After decaded of decolonisation Nigerian still CANNOT feed themselves, rather talking bullfuck typing shit on public forum and playing victim to their neighbor instead of the curse fg government. Nigerian have no shame and are weakmindedness, stupid and spinelessness., this attributes tell you of cursed people who will NOT live to see development in their country. Bunh of crook nigerians. gian ot africa my foot.

successcertain:


Oil, bauxite, gold, diamonds, gas, uranium, agro products...,Are in nigeria but 80% are still starving

But some nigerian fools continue to die at sea trying to reach Europe where they get subjected to modern day disgust treatment and sex slavery.

Nigerian women get dragged by white men across oceans to play the roles of sex slaves, Nigerian are so hungry and the FG governments are sucking up to Rhodesians and white South Africans to move to the shithole call nigeria to work the land and feed the lazy hungry nigerian people, why can't these human prototypes who die at sea and those who are involved in scams, drug and prostitute...work the land and feed themselves and the general population?

The white south african and chines are in nigeria to steal and feed starving weakminded and lazy nigerian who cannot fight for democracy, feed themselves or smart enough to start something and make use of all the abundant recouses the land has been lying fallow for decades whilenigeria were all over the show carrying begging bowls begging for food and kissing anybody ass with dollars. If this is the price Nigerian have to pay for their involvenent in slave trade descendants of slaves can sit back and laugh out very loud.

The curse of ham can be seen in the laziness and weakminness of Nigeria and that is not about to change, not in this lifetime.

After decaded of decolonisation Nigerian still CANNOT feed themselves, rather talking bullfuck typing shit on public forum and playing victim to their neighbor instead of the curse fg government. Nigerian have no shame and are weakmindedness, stupid and spinelessness., this attributes tell you of cursed people who will NOT live to see development in their country. Bunh of crook nigerians. gian ot africa my foot.

Is this why you started the thread? to insult nigerians?where are u from?