President Jacob Zuma, left, speaks to Nigerian President Muhammadu Buhari during a visit to Nigeria.  Picture: GCIS
President Jacob Zuma, left, speaks to Nigerian President Muhammadu Buhari during a visit to Nigeria on Tuesday. Picture: GCIS

MISERY loves company. Africa’s two biggest economic rivals — SA and Nigeria — are turning to each other as they fall on tough times.

SA’s economy is threatened with recession as demand from China, its main trading partner, weakens and commodity prices plunge, while Nigeria has been hit by a collapse in oil revenue.

To weather the global storm, the two countries are seeking closer trade and investment ties as South African President Jacob Zuma leads a high-level delegation of ministers and business executives to Nigeria on Tuesday. In the process, he may rebuild a relationship that has come under diplomatic strain in the past.

Nigeria may be Africa’s largest economy — having overtaken SA in 2014 after the data was overhauled — but SA still dominates because of better power and transport infrastructure, a sophisticated financial services industry and a more diversified economy. Both economies are now under pressure, with growth slowing to 1.3% in SA last year and reaching a 16-year low of 3.3% in Nigeria, according to the World Bank.

On Tuesday the Nigerian Bureau of Statistics said the country's economic growth slowed to 2.11% in the fourth quarter of 2015 from 5.94% a year earlier as a result of lower oil prices.

SA is the biggest buyer of Nigerian oil in Africa, shipments of which have more than doubled between 2008 and 2014, according to data from the International Monetary Fund. However, Nigeria doesn’t even feature in the top 20 of SA’s export markets.

"There is scope for the two countries to expand trade ties, particularly in noncommodity products," said William Jackson, a senior emerging-markets economist at Capital Economics in London. There could "be greater benefits over the medium term, as rising trade in noncommodity goods tends to come alongside faster productivity growth and more rapid rises in incomes", he said.

The one thing standing in the way of stronger trade ties is the Nigerian currency. The central bank has effectively pegged the naira at 197 to 199 per dollar for a year by banning imports of everything from glass to wheelbarrows, and restricting foreign-currency supply. The currency controls are deterring investors, such as Truworths International, which shut its two remaining stores in Nigeria in January.

In his first state visit since Muhammadu Buhari was elected Nigeria’s president last year, Mr Zuma may also seek to resolve a dispute that threatens the Nigerian operations of one of SA’s biggest companies, MTN. Nigeria’s telecommunication regulator imposed a record $3.9bn fine on MTN last year for failing to meet a deadline to disconnect unregistered mobile-phone subscribers.

Even before that, diplomatic relations between the two countries were strained by xenophobic violence in SA last April, in which Nigerian businesses were attacked. Nigeria temporarily withdrew its two most senior diplomats from SA at the time.

"These two countries need this competitive kind of relationship, where they co-operate even though they are competing," said Azwimpheleli Langalanga, a visiting research fellow in the economic diplomacy department at the South African Institute of International Affairs.

Nigeria wants "to be taken seriously because they are a serious player on the African continent," he said.