Abuja: Nigeria on Wednesday accused South Africa of blocking a legal arms purchase and threatened retaliation against major South African companies, including telecom giant MTN, if the spat is not resolved.
A top official in the office of Nigeria`s National Security Advisor (NSA) told AFP that the country had an agreement to buy $5.7 million (4.5 million euros) worth of military hardware in a deal brokered by a South African firm.
The official, who asked that his name be withheld, said Pretoria had frozen the cash wired to the South African firm`s account.
A spokesman at South Africa`s National Prosecuting Authority was not immediately available for comment, but the asset freeze has been widely reported in both Nigerian and South African media.
"The issue could affect bilateral relations between Nigeria and South Africa," the NSA official said.
He specifically mentioned MTN -- a South African-based mobile phone and Internet provider with tens of millions of subscribers in Nigeria -- as a company that could be targeted in a reprisal.
"You cannot be making so much money from Nigeria and then turn around and embarrass the people," he further said.
The official told AFP that Nigerian President Goodluck Jonathan called his South African counterpart Jacob Zuma to inform him about the purchase and Abuja was therefore surprised to learn that the deal had been blocked.
Zuma spokesman Mac Maharaj had no comment on the reported conversation between the two leaders, but told AFP "the president is not a part of (the) committee" that reviews arms deals.
The NSA official did not identify the South African broker or specify what weapons Nigeria was trying to buy.
The website of South Africa`s City Press named the broker as the Cape Town-based Cerberus Risk Solutions but that could not be independently verified.
The development comes roughly three weeks after South African customs officials seized $9.3 million in cash stashed in the luggage of two Nigerians and an Israeli.
South Africa`s prosecution authority said there was evidence indicating those funds were intended to purchase armaments to be used in Nigeria.
The Nigerian security official declined to comment on whether the cash found in the plane last month was part of a weapons purchase, but insisted the $5.7 million deal frozen by South Africa was a legal arms "transaction through a bank".
Nigerian lawmakers last month approved a request from Jonathan for a more than $1 billion loan to fight Boko Haram extremists.
Analysts saw the president`s request as a tacit acknowledgement that the military is overmatched against the Islamists, who are thought to control more than two dozen towns and villages in the embattled northeast.
Troops have refused to deploy for offensives against the insurgents on grounds that they lack proper equipment.