XENOPHOBIA: A threat to South African Real Estate Investments

Xenophobia is intense dislike or prejudice against people of another country or race. This word came under intense spotlight recently following the wanton display of cruelty by South Africans who claim to be threatened by the presence of foreigners in their country who have supposedly taken over majority of their businesses and jobs.

In 2014, South Africa became the 13th most attractive destination for Foreign Direct Investment (FDI). I wonder what becomes of them after this latest round of xenophobic attacks. The attack which was sparked off by the retrenchment of some South African blue-collar workers and their replacement with foreigners from other African countries has generated a lot of fear among Nigerian property owners in South Africa and even South African property owners in Nigeria.

Imagine that South Africans were at the receiving end of xenophobic attacks in Nigeria carried out by Nigerians; the situation in Lagos will be more devastating and deadly than the one we had in Durban. What else will you expect in a country where the population of black people represents one-fifth of the continent’s population. This makes it a profit-oriented destination in the face of undaunting challenges and unsavoury conditions for investors especially our South African counterparts who for a moment stopped being brothers.

Some notable South African companies have found solid footing in the Nigerian market making tremendous gains where European and American companies fear to venture.

Global giants, MTN stormed into the Nigerian Telecommunications industry in 2001 with reckless abandon at a time the country was perceived as one of the low value ends of the frontier market. MTN had a field day for quite a while before they began facing competitions from the rest.

While MTN was enjoying the fertile ground that was lying fallow in the telecommunications field, the Protea Hotel chain was also registering its presence in Nigeria’s major cities. Today Protea is the largest hotel chain in Nigeria, operating through a unique franchise model which seeks out Nigerian hotel and hospitality Investors as partners, while bringing in its own brand franchise and management expertise.

Not forgetting the escapades of Shoprite from the retail end of the market with an intimidating presence in key Nigerian cities of Lagos, Ibadan, Enugu, Ilorin yet expanding its frontiers and making huge gains or is it Multi-choice who have continued to monopolise their own area of business leaving local players with no chance to even compete in this capital intensive industry.

Multi choice and Nu-Metro are stalwarts when it comes to entertainment with emphasis on Media and Cinema. South African investments even hold sway in the Banking and Financial sectors with the emergence of Stanbic IBTC Bank and other mid-sized businesses dotting the Nigerian business landscape, South Africa today stands as one of the major players in the Nigerian economy.

South Africans know that they made huge returns in Nigeria as their businesses appear better suited to the Nigerian business environment than their Western counterparts.

Though Nigerian businesses such as Oando, Dangote group, Arik Air, First Bank and Union Bank are gradually making forays into the South African market, it still is a far cry from what is obtainable in Nigeria.

However, there is still a level of discomfort between Nigerian local businesses and their South African counterparts due to selfishness on the part of the South Africans who continue to make huge gains in the Nigerian market amid the differences abound. The South African firms would rather trade among themselves than patronize local options in Nigeria. It is usually alleged that MTN Nigeria, in giving out its banking and collection mandate, will prioritise Stanbic IBTC Bank, a bank with South African interest, above local Nigerian Banks. The same is said of the other South African businesses.

Beyond this, there are also the allegations of over-pricing of services in Nigeria, in comparison to the prices these firms charge in South Africa. There are so many ills associated with the bilateral relationship between Nigeria and South Africa and the xenophobic attacks on our Nationals and their properties could have been the last straw that broke the camel’s back.

South Africans have shown hostility to Nigeria and Nigerians on a number of occasions, the xenophobic attack was an icing on the cake.

Complaints about the non-reciprocity of the open door policy to Nigerian businesses in South Africa often create inter-government friction, to the extent that bi-lateral relations between the two countries was nearly damaged in 2012 when 125 Nigerian business travellers to South Africa were denied entry into South Africa for not having valid Yellow Fever certificates. The Nigeria government, in retaliation, also expelled 56 South Africans. This situation led to huge tensions which were later resolved with the easing of travel restrictions.

When South Africa opened their doors widely to foreign nationals who would have thought it was a trap.

Taking a critical look at the various South African investments in Nigeria and their dominance, you would want to agree that South Africans should be among the highest population of foreigners in Nigeria. Then if we were to juxtapose the tragedy in Durban with Lagos and thus replicated what do you think will be the fate of South Africans and their investments in Nigeria?

If our government clamp down on their businesses as an option in the fight against xenophobia, won’t it have a far reaching devastating effect? But it’s a pity we ain’t Xenophobic, so I guess South Africans and their investments in Nigeria should thank lady luck.