The Rand Merchant Bank Nigeria (RMBN) and the Nigeria–South Africa Chamber of Commerce (NSACC) at a breakfast meeting in Lagos, explored ways to enhance bilateral trade and investment opportunities between Nigeria and South Africa with a possible swap deal on Naira and South African Rand.
At the event held recently in Lagos, the Managing Director and CEO Financial Derivatives Company Limited, Bismarck Rewane, stated that 1.22 per cent of Nigeria’s import were from South Africa, while 4.5 per cent of its exports goes to South Africa, showing a lopsided trade relationship.
According to him, Nigeria’s export of minerals to South Africa in 2017, hit an export value of 99.6 per cent and realised $1.83 billion revenue, while its rubber export was at 0.17 per cent and brought $3.13 million revenue for Nigeria.
He maintained that plastics took the lead in South Africa’s exports to Nigeria in 2017, with an export value of 24.3 per cent at $104.4 million.
Exports of machinery and mechanical appliances stood at 9.73 per cent to realise $41.8 million revenue, while edible fruits and nuts stood at 7.66 per cent, with a value of $32.9 million revenue.
On the setbacks to Nigeria–South African trade, he cited political environment, border and customs logistics, security issues (xenophobia), tax and legal constraints and weak institutions as challenges to a healthy bilateral relation between the two countries.
He noted that as the largest economies in Sub-Saharan Africa (SSA), accounting for 37 per cent of the Gross Domestic Product (GDP), 59.3 per cent of the total export trade and 58.2 per cent of total imports of SSA, the NGR and ZAR swap would deepen trade and investment relationship between them.
“The bilateral trade would improve trade ties and encourage movement of goods and services, ease pressure on external reserves and enhance infrastructural development and job creation.
“Swap arrangement will enhance trade flows by at least 50 per cent to $4 billion, narrow Nigeria – South Africa trade imbalance to less than $1 billion and companies that play in retail, telecommunications, power and entertainment sector will be key beneficiaries of the arrangement,” he said.
Rewane envisaged that bilateral agreements between the countries key trade partners would boost inclusive growth and lead to increased external reserves, reduce exchange rate volatility, facilitate lending to the real sector and improve infrastructural development and job creation.
“A bilateral agreement could keep oil price above $80 per barrel, oil production at 1.8 million barrels per day, trade surplus at $20 billion and the interest rate environment at a declining path.
“It would lead to easy negotiations between the two countries, benefits would be reaped faster than multilateral agreements, countries can choose trading partners, trade barriers could be reduced or eliminated and stronger economic ties would be built,” he added.
Source: G Business