The Nation Newspaper

Tag: china

  • China projects $12b investment in Nigeria, others by 2030

    China projects $12b investment in Nigeria, others by 2030

    The Chinese government is determined to expand its investment portfolio across Africa to $12billion by 2030.

    Giving this hint at the weekend was the Managing Director, ZTE Nigeria Limited, Brielle Gao.

    She spoke as a guest at the 19th Brainstorming Session on United Nations Sustainable Development Goals in Nigeria, with focus on China-Nigeria Relations. The event, which held in Lagos was organised by the Nigerian Institute of International Affairs in collaboration with the Embassy of the Peoples Republic of China in Nigeria.

    ZTE Nigeria is a member of ZTE Corporation, the world leading telecommunication equipment and solution providers.

    According to Gao, her home country, China is committed to investment and long term sustainable partnership in Africa.

    “China would set up a $2bn fund to support south-south cooperation. China would also try to increase its investment in the least developed countries to $12bn by 2030. This belies the popular assertions that China’s substantial increases in aid to the region are motivated by short-term commercial and strategic interests, but are broader and more long-term.”

    Going down memory lane, she recalled that the late 1950s and early 1960s saw the advent of independence for most African countries, thus the relationship between the continent and China was modest and based on non-aligned diplomatic principles.

    She was however quick to admit that: “The remarkable expansion and modernisation of China’s economy in the 1980s and the 1990s resulting in massive industrial, energy, and market expansion needs, necessitated an increasingly closer economic relationship with Africa.

    “Overall, China is now Africa’s largest trading partner with trade ballooning to about 700% in the last decade. The trade relation has evolved from basically selling cheap clothing, bags, and kitchenware to oil, infrastructure and mining projects across the continent.”

    While acknowledging that China’s economy has momentarily slowed down, she however emphasised that there is greater need to shift to Sino-African relationship to a consumer-driven model that will inevitably depend less on African raw materials and market to an investment model with long term sustainable partnership model.

    Specifically, she said: “Last September, the Chinese president Xi Jinping at the UN after the launch of the new sustainable development goals (SDGs) pledged to support the SDGs.

    Besides, she said: “China through the Exim-Bank of China now offers developing countries, in Africa, loans with which to develop their infrastructures and resource rich own economies. These loans are not in any way a concealed plot to take over African countries. Rather they were rooted in China’s experience that natural resources could help poor countries develop and diversify their economies.  In China’s viewpoint, they offered a win-win solution.

    “As China’s economy slows down coupled with the increase in the cost of production China has began to look to Africa as the next most promising alternative destination for investment in, agriculture, industry and manufacturing,” she reiterated.

    Many Chinese companies, she stressed, “Have been among the most enthusiastic investors in Africa in the past two decades compared with Africa’s hesitant traditional western partners.

    “There is also increasing evidence that the Chinese engagement in Africa is largely beneficial rather than a menace. African governments with the right incentives by encouraging manufacturers to invest locally, transfer technology and employ local staff are already reaping the benefits with increase in commodity exports.”

  • Lessons from China’s one-child policy

     SIR:From time immemorial, African culture and tradition have primarily shown that a man’s social prestige is closely tied to the numbers of his human assets—wives, and consequently, children. Notably, while civilization and rationality have caused many regions in Nigeria to desist from this societal dogma; northern Nigeria seems to be keen on sustaining it, regardless of the security and economic tension in the country.

    Even before the rise of Boko Haram mayhem, the high population of out of school children as well as children with little or no parental attention has been a characteristic feature of Northern Nigeria. Child marriage has remained a trend and women give birth to as many children as possible even when there are limited resources to cater for them. The end result of this trend includes poverty, illiteracy, and under-development of the north, especially when compared with other region in the country.

    Thus, we must borrow a leaf from China’s former one child policy which was introduced to alleviate social, economic and environmental problems in China. Though, many have condemned this measure, arguing that economic prosperity is not driven by population size but by how a country invests in its human capital and manages its resources; it must be noted that a country needs to be skillful in human management too, otherwise catastrophe will abound.

    An instrumental family planning scheme should not be regarded as irrelevant any more. Although the advocacy to limit the number of children in Nigeria is no news, but so far, it seems to have very little impact. The Nigerian government must thus, improve its crusade on family planning, particularly in the North. There is a need for a more vibrant and active campaign against early marriage and for girl child education. To achieve this, orientation on the indispensable value of education should be organised in the rural northern region in order to sensitise rural dwellers on their roles in economic development especially through child birth control. The advancement of the Nigerian economy is not the responsibility of the government alone, but that of every Nigerian.

     

    • Tolulope Lawani,

      Lagos State.

  • Africa needs China, says APC women leader

    Africa needs China, says APC women leader

    The short and long term gains of a mutually beneficial economic relationship between Africa and China have been re-emphasised.

    According to the President, Council of African Political Parties (CAPP) Women wing, Dr. Ramatu Tijjani Aliyu, the relationship would be a win-win situation that would also improve the socio-economic status of the peoples of Africa and Asia.

    Aliyu, who is also the National Woman Leader of the All Progressive Congress (APC), made this assertion in Beijing, China during a three- day conference on the objectives of the ‘Silk Road’ project for a dynamic Afro-Asian relationship.

    The summit, which held under the auspices of International Conference of Asian Political Parties (ICAPP) with the theme ‘New Vision of the Silk Road: Action for Common Development,’ explored issues of political leadership, economic integration, cultural bond and new impetus for emerging economies.

    While highlighting the diplomatic benefits of the Silk Road initiatives, she said: “This project would enhance a people-to-people cultural exchange and mutual learning among the peoples of the relevant countries, and enable them to understand, trust and respect each other and live in harmony, peace and prosperity.”

    Noting that the project could not have come at a better time when the world is confronted with challenges in various strata of the global economic chain, Aliyu however enthused that Africa remains a willing partner in progress and that the countries along the Belt will benefit immensely from what Africa and indeed the APC-led government of Nigeria has to offer.

    These, she added, include natural resource-extractive commodities, agricultural goods such as cotton, cocoa and other traditional African exports, non-traditional exports such as processed commodities, light manufactured products, house-hold consumer goods, food, and tourism.

     

    Aliyu noted the importance of women in global economic development while commending President Muhammadu Buhari for giving six ministerial slots to women.

  • UNIZIK lecturers in China on cultural exchange

    UNIZIK lecturers in China on cultural exchange

    To enhance academic linkage and collaboration with Xiamen University in China, Nnamdi Azikiwe University (UNIZIK), Awka in Anambra State has nominated 10 of its young lecturers for a two-week training in China.

    Welcoming the trainees, the programme coordinator, Mr Wu Qunbin, said he was elated that the collaboration with UNIZIK had finally taken off. He said he was enthusiastic the partnership would boost academics in both institutions.

    Qunbin said Xiamen University is a top research institution in China, adding that the goal of the school was to pursue excellence in all academic areas. He said the two-week programme comprised academic exchanges based on the trainees’ disciplines, visits to cultural sites in Xiamen and Beijing, where the final training would take place.

    He said: “The aim of the exchange programme is to learn new things and to broaden knowledge. The exchange will provide opportunities to assess learning as well as cultural experiences between Nigeria and China. I promise that the visit would remain unforgettable and memorable for the young scholars.”

    The lecturers drawn from a number of departments include Mr. Chikezie Uzuegbunam and Miss Ngozi Emmanuel from Department of Mass Communication, Miss Idara Hanson, History and International Relations Department, Mr Somtoo Arinze-Umobi and Mr Onyeka Ebekue of Theatre Arts Department. Others are Mrs Martha Egenti and Mr Akachukwu Orji Linguistics Department, Mr Ejike Okaphor and Reverend Father Maurice Izunwa of Faculty of Law and Mr Chukwunonso Okoye of Chemical Engineering Department.

  • China donates jobs tools to IDPs

    China has donated sewing machines, clippers and generators to Internally Displayed Persons in Abuja.

    The Chinese Ambassador to Nigeria, Mr. Gu Xiaojie said that the gesture would improve the lives of the IDPS.

    Xiaojie, who spoke to reporters at the IDPs camp in new Kuchingoro, Abuja, added that China would train the IDPs in tailoring, fashion designing, hair dressing and repairs of generating sets.

    “The skills acquisition will go a long way to assist the IDPs. The programme will benefit them immensely,” he said.

    He said that his country would continue to support Nigeria in its fights against insurgency while condoling with the victims of the recent Kuje and Nyanya bomb blast in Abuja.

    “China will continue to support Nigeria in attaining peace and stability. Our hearts are with them. We hope those injured will recover quickly,” he said.

    He added that with the help of other super powers, Nigeria would overcome the challenges of terrorism.

    “This issue of terrorism will be firmly resolved with collaborative efforts of the global village,” he said.

     

  • ‘China’s crude oil importation from Nigeria steady’

    chinese Ambassador to Nigeria Gu Kiaojie has said his country’s crude oil importation from Nigeria has been steady in the last five years.

    Gu told the News Agency of Nigeria (NAN) that contrary to insinuations, “China’s oil import from Nigeria remains steady”.

    “For the past four to five years China has never reduced the volume of crude oil importation from Nigeria, the volume remains stable,” he stressed.

    The Chinese envoy, who described the current trend in the crude oil market as a global phenomenon, said the global oil market was weak.

    He blamed the trend on weak global economy and the market forces of demand and supply, though he admitted that China was not a major crude oil importer in the world.

    “China steadly purchases between two to three per cent of total global Nigerian crude oil export”

    He advised Nigerians to redouble their efforts in looking inward and see what they can produce locally rather than relying on importation.

    Besides crude, Gu also said China imports commodities as iron ore, soya beans from Nigeria on a regular basis.

  • Sokoto, China collaborate on Illela ‘China Town’

    To strengthen its economic base, the Sokoto State government plans to fast-track collaboration with the Peoples Republic of China in an effort to boost commerce and establish mining and agro-allied industries in the state.

    The partnership aims to maximise the tapping of natural resources in the state, particularly in the area of solid minerals.

    The state government will therefore provide land for the establishment of a ‘China Town’ in the border-town of Illela to boost trade and investment in the West African region.

    Disclosing the development in Sokoto yesterday while receiving the Chinese Ambassador to Nigeria, Mr Gu Xiaojie, who was on a courtesy visit, Governor Aminu Waziri Tambuwal cited feasibility studies undertaken so far by Chinese companies on the projects, adding that the state government awaited their reports to determine further action.

    Apart from mining and agriculture, the two governments would explore other areas of cooperation likely to be of mutual benefit, noted the governor.

    He listed the areas to include education, agriculture, health and youth and women empowerment, among others.

    Tambuwal, however, appealed to the Chinese government to support Nigeria’s fight against corruption and help the present administration with its security and job creation efforts.

    Ambassador Xiaojie added that he was in the state to straighten the cordial working relationship between his government and the Sokoto government.

    He commended Tambuwal on achievements recorded thus far and assured that China would continue to work closely with the state government towards achieving objectives.

  • China’s soaring business empire in Nigeria

    With a Gross Domestic Product (GDP) projected to hit $19.23 trillion this year, surpassing United States’ $18.29 trillion, China has become a counterforce to U.S. monopoly of the global economy. Much of its soaring economic power is drawn from the activities of a horde of Chinese businessmen and entrepreneurs, who have ‘invaded’ the Nigerian market, swelling its trade volume with Nigeria by $18.1 billion (about N38.01 trillion). Assistant Editor CHIKODI OKEREOCHA reports that despite Nigeria being the toast of Chinese investors and businessmen, there are still grey areas in the blossoming relationship.

    Firm grip on manufacturing, agric, rail transport business

    Nigeria’s population of approximately 170 million people and still growing at over two per cent per annum makes it the seventh largest in the World.  According to United Nations (UN) statistics, Nigeria’s population will hit 230 million within the next 20 years. Representing over 65 per cent of the effective West African market, Nigeria remains the most competitive destination for the establishment of medium and large manufacturing industries.

    Like the early morning bird, China has since positioned itself to take advantage of this expansive market by unleashing its horde of investors and businessmen on the manufacturing sector in the country. From textile to garment; household appliances to automobile; consumables to iron and steel as well as ICT products, China has taken over, churning out tons of products for different segments of the market.

    More Chinese enterprises are expanding their investments in the manufacturing sector ostensibly in the hope of transferring technologies and training personnel to increase local job opportunities. For instance, Chinese-owned Western Metal Products Company Limited (WEMPCO), a multi-billion naira integrated steel mill, situated at Magboro, on Lagos-Ibadan Expressway, Ogun State, is the first of its kind in Africa. The sprawling steel facility boasts of a production capacity of 700,000 metric tonnes and a production machinery of five-stand Tandem Mill.

    The factory, according to its Group Managing Director, Mr. Lewis Tung, will produce cold roll steel sheet of up to 0.15mm in thickness and coils of the same dimension and above. Other facilities in the plant include: a 52-megawatt generator for power supply; a water treatment and recycling plant; an acid generating plant; an air purifier and an annealing line.

    The economic benefits of such investment are huge. Apart from boosting economic activities of the immediate host communities, local, state and the country, it will spur increase in downstream economic activities and create jobs for artisans such as technicians, drivers, auto technicians and fabricators. Mr. Tung added that it will also enhance training and technology transfer. More importantly, the investment will fill the gap left by the moribund Ajaokuta Steel Company in Kogi State.

    Another area witnessing massive investment from China is the agriculture sector. A leading Chinese company, New Hope Liuhe Company Ltd., has indicated investment interest in agribusiness. At a business meeting with the Executive Secretary, Nigerian Investment Promotion Commission (NIPC), Mrs. Uju Hassan-Baba, at the commission’s headquarters in Abuja, said it plans to invest in other sectors like manufacturing, processing and selling feeds, raw material additives, milk products, and agricultural bye products, among others.

    Chinese enterprises are also investing in seed cultivation and have become the Nigerian Government’s seed providers, a development that has boosted local self-support in grain.

    The Chinese also visible in the transport sector, especially in rail transport. Two projects that demonstrate China’s dominance in the sector include the $1.49 billion Lagos-Ibadan railway contract, which has been awarded to China Civil Engineering Construction Corporation (CCECC) and the Olokola Deepwater Port project, awarded to the China Ocean Shipping Group.

    According to an Ernst & Young report on Nigeria issued for the 2014 World Economic Forum on Africa, CCECC is the main engineering, procurement and construction contractor for the Lagos rail mass transit project. The Phase I is a 27.5-kilometre ‘blue line’ scheduled for completion towards the end of 2015.

    The state-owned Export-Import Bank of China (ExIm Bank) is also providing a $500 million concessionary loan for the 186-kilometre modernisation of the Abuja-Kaduna rail line, which includes the building of 36 bridges and nine fully-developed stations. The remaining $374 million for the project comes from the Federal Government. Track laying for the single standard gauge line was formally launched in July 2013.

    Before his inauguration on May 29, Buhari hosted a delegation from CCECC, who paid him a visit to present a prototype of its new high speed rail project. Observers described the visit as an indication that the Buhari administration may be looking to develop a high-speed rail network across Nigeria.

    Early last year, former President Goodluck Jonathan got the comatose railway network on its feet with a N24 billion ($151.7 million) investment programme that involved the upgrade of tracks and signalling equipment. With the purchase of 25 GE locomotives and renovation of 500 wagons and passenger coaches, services resumes on the 1,126-kilometre Lagos to Kano line that had been shut for the last 10 years.

    The move came on the heels of the commissioning of several new air-conditioned diesel-powered railcars and six 68-seater air-conditioned long distance coaches in June last year. The new rolling stock was procured by the Nigerian Railway Corporation (NRC).

    It was part of Federal Government’s ‘25-year railway strategic plan’ aimed at encouraging private investment for the renovation of the country’s existing narrow gauge railway lines and building new, standard-gauge lines.

    That was complemented by China in 2012 with the formal opening of  a Railway Technology Training Centre by CCECC in Abuja to assist Nigerians in developing the skills needed to support plans for rail and mass transit systems. The China Railway Construction Corporation Limited described its $8.3 billion rail network modernisation project in the country as its “biggest overseas project.”

    Besides the rail and power plants, the Asian nation is also instrumental to supporting Nigeria with financial arrangements and investments in strategic infrastructural projects like road, airport terminals and free trade zones, among others.  For instance, China and Chinese companies are major stakeholders in the Lekki Free Trade (LFTZ), Lagos. On completion, the project will attract international investors in the manufacturing, commerce, tourism sectors and more.

    The project is expected to provide 300, 000 direct and 600, 000 indirect jobs in the next few years. That informed why the former Minister of Industry, Trade & Investment, Dr. Olusegun Aganga’s description of the LFTZ as one of the biggest Chinese projects in the country.

     

    Telecoms, FMCG, others also cornered

     

    Chinese companies have since garnered a substantial share of Nigeria’s burgeoning telecoms/ICT market. Chinese enterprises, in collaboration with telecommunications operators, are instrumental to the unprecedented growth of Nigeria’s telecoms sector. Through the active participation of Chinese firms and investors, the Nigeria’s mobile phone subscription has grown from below 400, 000 in 2001 to over 140 million. The teledensity has also grown to over 100 per cent.

    The popular Global System in Mobile telecommunication (GSM) villages in Lagos and Abuja, as well as several other commercial cities across the country bear imprints of China’s dominance of the sector. Most mobile telecom shops in the two city centres are stocked with China-Made products, ranging from phones to laptops, Bluetooth devices to headphones and hands-free devices, among others.

    For Seye Olatunji, a GSM trader at GSM/Computer Village, Ikeja, the business of selling China products has been exciting and rewarding.

    His words: “It is usually more expensive to buy products from other western countries, but that is not the same for China. Most of us here can now go to China ourselves and buy products under very flexible terms and conditions.”

    Even buyers share the same feeling.  “If you compare the China smart phones with those from other countries, there is little or no difference at all. And the China ones are even cheaper. So, why should I spend more money on something equivalent to this one?” Audu Hassan, a customer at the Computer Village, asked.

     

    General merchandising is China’s forte

     

    Scores of Chinese businesses dominate the retail segment of the market in various parts of the country. Brands such as Viju Milk, Huawei, ZTE, Alcatel and others are household names Chinese restaurants, such as Golden Gate, Lagos; Oasis Bakery all in Lagos and several other retail outlets businesses dot the landscape and they are enjoying tremendous patronage.

    Since 2005 when it was established, China Town in Lagos, has been serving as a one-stop-shop for goods and services, ranging from textiles, shoes, jewelleries, electronics, kitchen utensils and other items. Visiting China Town, with its competitive pricing and accessibility has become a must for most Nigerian shoppers.

     

    Why Nigeria is toast of investors

     

    That Nigeria has become the beautiful bride for Chinese investors is an open secret. Its bountiful but largely untapped natural resources; large domestic market of over 170 million; a growing middle-class with spending power and an increasingly stable polity, among others, have become irresistible to China and Asian investors.

    Nigeria’s vast energy reserves, especially in oil & gas, may be all that is needed to fuel China’s growing industry. Africa’s most populous and largest economy with GDP size of about $500 billion is also the largest market for China’s industrial products in Africa. Nigeria’s imports alone from China account for over a third of its total trade with West Africa.

    The volume of imports is projected to increase in the coming years, as Nigeria is tipped by various international rating agencies and analysts to overtake South Africa by 2025 if her current GDP growth rate is sustained. Nigeria’s relatively stable democracy is also believed to be one of the major factors why investors across the globe particularly China see the country as an investment destination.

    Also, the ease of setting up businesses in Nigeria has improved through on-going reforms in the trade and investment sector. Returns on investment in Nigeria are relatively high, especially considering the exchange rate of the dollar to the naira with the major western currencies and the Chinese Yuan.

    The pattern and dynamics of the Nigerian economy may have also opened the floodgate for Chinese companies to invest heavily. For instance, experts say that Nigeria’s transition from a manufacturing and agricultural producing nation to an import dependent economy may have broadened the retail sector, which now accepts virtually anything from anywhere in the world. This is the leeway through which Chinese investors and goods have taken roots in Nigeria. The emergence of a vibrant retail sector in Nigeria is also said to be as a result of the nation’s several porous borders.

     

    U.S., other Western countries jittery

     

    Obiora Akabogu, a Lagos-based lawyer and public affairs analyst, noted that China has evolved into an ultra-modern economy and a leading member of BRICS (Brazil, Russia, India, China and South Africa), a group of five industrialised nations.

    “China is now a counterforce to US monopoly of the global political economy,” he said, attributing China’s meteoric rise in the global economic scene to the Cultural Revolution of the 1960s, led by Chairman Mao Zedong.

    He said the overthrow of the then capitalist government in China, under the Cultural Revolution by Zedong and subsequent policy of ‘Giant Leap Forward’, has ensured that China’s economic growth moved on a geometric progression rather than on arithmetic progression.

    “The policy was meant to catch up with the Western countries,” he told The Nation, even as he traced the raging cold war between China and the Western world to the strategic move.

    He said Zedong’s economic blueprint for China ensured that China’s economy grew by leaps and bounds, sending jitters down the spine of the U.S. and other Western powers. Akabogu said the fact that the issue of outsourcing goods and services to China is always in the front burner at every U.S. presidential election attests to China’s growing influence in the global political economy.

    Although, China is still relatively a poor country in terms of its standard of living; its economy only produces $12, 900 per person, compared to the GDP per capita of $52, 800 for the U.S. This low standard of living allows China to pay its workers less, making its products cheaper, which lures overseas manufacturers to outsource jobs there. Akabogu said many American companies, forced out of business by heavy taxation, have relocated to China. The public affairs analyst is right. The Chinese government is favourably disposed to policies that support trade, entrepreneurship and commerce within and outside its borders. This informed the massive drive to conquer foreign markets, including Nigeria with Chinese goods and investments.

    On the other hand, the U.S. and other western economies are known for their stifling regulation, and high taxes.

    Besides, businesses from the West mainly move as corporate organisations rather than individual entrepreneurs; hence, they are not able to manoeuvre costs to their advantage as done by the Chinese.

    That is not all. China is said to have overtaken the West in terms of imports into Nigeria. The Asian Tiger has continued to dominate the ICT and the electronics retail sectors that appear to be less regulated compared with the more regulated oil and gas and the financial services sectors controlled by the West.

    “China wants to use Nigeria as a launch pad to project her economic power to the rest of the world and the U.S. is not comfortable with this,” Akabogu said, pointing out that as sign that America is not comfortable with China’s expanding business, the former U.S. Secretary of State and presidential hopeful Hillary Clinton recently embarked on a shuttle economic diplomacy to South Africa in a bid to counter China’s growing influence.

    Also, U.S. President Barack Obama, during his recent visit to Africa, announced an offer of $7 billion infrastructure loan to Africa, an offer considered by many foreign affairs experts  as coming too little and too late.

     

    Substandard products from China is sore point

     

    As Akabogu observed, Nigeria has benefited more from Nigeria. According to him, the balance of trade between both countries has tripled since the return of democracy in 1999.

    “It’s been a mutually beneficial commercial relationship. China takes Nigeria’s oil as trade by barter for construction activities, which the Chinese Government subsidizes. What Nigeria exports to China are oil and a few agric products,” he pointed out. Akabogu added that Nigeria has been sending engineers to understudy Chinese engineering system at subsidised rate.

    But, as rewarding as the relationship may be to Nigeria, there are concerns over alleged sharp practices by Chinese companies, anti-labour practices and perceived dominance of the market by fake and substandard products from China. The thinking is that the West may be lagging behind in the Nigerian market because of the quality of their products compared to cheaper and lower standard Chinese products. This is so particularly in Nigeria where consumers patronise cheaper goods more while being indifferent about quality.

    But, as far as Director-General of Enugu Chamber of Commerce, Industry, Mines and Agriculture (ECCIMA) Sir Emeka Okereke is concerned, China is not to be blamed for the preponderance of substandard products in the market. He blamed the situation on Nigeria’s weak institutions. “It’s because of our inherent weak institutions that are unable to check the influx of substandard products,” he told The Nation, asking, “where is our Customs?”

    He said Customs and other regulatory agency should wake up to their responsibilities. “Our borders and ports should be effectively policed especially considering that we are an import-dependent economy,” he emphasised.

    Akabogu agrees with him. He said blaming China for fake and standard products in Nigeria amounts to throwing punches in the wrong direction.

    His words: “It (substandard products) is a shortcoming on the part of regulatory institutions. That is why we’ve been canvassing the strengthening of institutions rather than individuals.”

    The legal practitioner pointed out that there is need to reinvigorate institutions such as the Police, Economic and Financial Crimes Commission (EFCC), Independent Corrupt Practices and other related Offences Commission (ICPC) and Code of Conduct Bureau (CCB) among others. “It boils down to leadership question; it’s a credibility gap, a competency problem on the part of Nigeria’s institutions,” he insisted.

    He also said every capitalist is in business to make profit and China is no exception. According to him, it is left for the host country to put measures in place to check likely excesses of foreign countries and their companies operating in its territory. Also, citing the Halliburton Scandal, which involved a U.S. company, he said sharp business practices are not limited to China alone.

    Additional report by Toba Agboola

     

  • China’s soaring business empire in Nigeria

    China’s soaring business empire in Nigeria

    With a Gross Domestic Product (GDP) projected to hit $19.23 trillion this year, surpassing United States’ $18.29 trillion, China has become a counterforce to U.S. monopoly of the global economy. Much of its soaring economic power is drawn from the activities of a horde of Chinese businessmen and entrepreneurs, who have ‘invaded’ the Nigerian market, swelling its trade volume with Nigeria by $18.1 billion (about N38.01 trillion). Assistant Editor CHIKODI OKEREOCHA reports that despite Nigeria being the toast of Chinese investors and businessmen, there are still grey areas in the blossoming relationship.

    It is not for nothing that the dragon is the symbol of strength and enterprise of the Chinese nation. Like the mythical monster, known for its fierce, protective and ravaging attributes, the Asian Tiger, as China is popularly called, has been ravaging the globe, especially the developing African continent in search of trade and investment opportunities. The search, no doubt, has paid off.

    China, for the first time, surpassed the United States (U.S.) as the world’s largest economy in 2014. Its Gross Domestic Product (GDP) soared to $17.63 trillion ahead of U.S. $17.42 trillion, according to the International Monetary Fund (IMF).

    According to the records in terms of purchasing power, China accounts for 16.5 per cent of the global economy, compared to U.S.’ 16.3 per cent. The Asian giant has also been tipped by the International Monetary Fund (IMF) to hit a GDP of $19.23 trillion before the end of this year, surpassing U.S.’ projected GDP of $18.29 trillion.

    With a population of 1.36 billion people, the largest in the world, China has to its credit the highest global economic growth rate in the last three decades, averaging 10 per cent annually. Yet, the ‘rampaging monster’ is charging on, drawing its greatest strength for her impressive growth rate, arguably, from her trade and investment exploits in Nigeria.

    From oil & gas to construction; power to Information and Communications Technology (ICT); manufacturing to education; healthcare to hospitality; transport to aviation; textile to defence and trading and general merchandising, China is spreading its tentacles in Africa’s most populous and largest economy.

    The Nation learnt that close to 300 Chinese companies are currently operating in various sectors of the Nigerian economy. The activities of these companies have seen the volume of trade between China and Nigeria growing from less than $2 billion in 2000 to $18.1 billion (about N38.01 trillion in 2014).

    According to the Chinese Ambassador to Nigeria, Mr. Gu Xiaojie, the figure represents 30 per cent increase over that of the preceding year. The envoy, who spoke at an interactive session with newsmen in Abuja, said bilateral relations between Nigeria and China had been growing in “leaps and bounds.”

    The ambassador’s position was corroborated by National Coordinator of the Nigeria-China Business Council (NCBC), Chief Matthew Uwakwe, who said the volume of trade transactions between both countries has grown from $3.4 billion to over $10 billion between 2009 when the Council started and this year (a period of six years).

    The NCBC, which is under the Ministry of Industry, Trade and Investment, was established six years ago to promote bilateral trade relations between both countries and grow infrastructural expertise in Nigeria.

    When The Nation visited the Council’s Lagos Office on Samuel Olabode Street, off Isheri Road, an official could not hide his excitement over what he described as “a business relationship skewed in favour of Nigeria.” To support his assertion, the official, who pleaded for anonymity because he was not authorised to speak, said nine Nigerians are currently undergoing training in China in the area of pre-paid meter installation and maintenance.

    He said on completion of the programme, the lucky Nigerians, to be trained free for two months, are to be engaged by SkyRun Electric Smart Metering System and Solutions (Nig.) Limited, a $500 million pre-paid meter/electronics manufacturing firm operating in the Calabar Free Trade Zone (CFTZ).

    As Uwakwe earlier explained, the youths were sent to China to sharpen their skills in modern technology, regarding energy and prepaid meters.

    “The training is to improve their skills in modern technology,” he explained, expressing hope that when they return, “the problem of prepaid meters will be reduced.”

    Immediate Power Minister Prof. Chinedu Nebo is also hopeful. He said establishing the metering company in the country will enhance revenue generation of the distribution companies (DISCO’s), thereby curtailing the menace of estimated billing as being experienced by electricity customers in many parts of the country.

    “As we increase electricity consumption rate, we also have to produce more meters to meet demand.” he said, lamenting that about 60 per cent of customers are not metered hence, manufacturing meters locally will significantly close the metering gap and create employment opportunities to unemployed youths, besides enabling investors to re-coup their investment as planned.

    SkyRun has been in Nigeria in the last 10 years. Its plant will is billed for inauguration in the last quarter of the year. The company has over 500 indigenous workers on its payroll an its Calabar site, where it is currently manufacturing a single-phase and three-phase Smart Meters. The meters will significantly boost the revenue base of DISCO’s operating in Nigeria. The NCBC official, who spoke with The Nation said many DISCOS’s have been placing order for pre-paid meters for their customers. An array of pre-paid meters displayed at NCBC’s office bears testimony to China’s resolve to play a leading role in Nigeria’s power sector post-privatisation.

     

    Running a ring round the power sector

    The power sector is one of the areas receiving Chinese investors’ greatest attention, a trend that is hardly surprising. China is aware of the huge unmet demand in Nigeria’s electricity market and is determined to fill the gap. For instance, access-to-power is currently limited to approximately 40 per cent of Nigeria’s estimated 170 million people and electricity supply has is still below 600 Megawatts (MW) for a suppressed demand estimated at 10,000 MW. The Federal Government’s target is to achieve up to 75 per cent access to electricity by 2020 by connecting an average of 1.5 million households annually.

    The huge electricity supply gap has created a market too lucrative and tempting for Chinese investors to ignore.  In July, for instance, a Chinese public utility – the State Grid Corporation of China (SGCC) – offered to inject a whopping $12 billion into the electricity sector in an ambitious investment programme in the second phase of the National Integrated Power Project (NIPP).

    SGCC, arguably the largest state-owned electricity utility company in the world, has offered to invest the money in two tranches, starting off with an initial payment of $8 billion and additional $4 billion later. The payments will be equity and loan participations in electricity transmission projects for the Transmission Company of Nigeria (TCN) through the Niger Delta Power Holding Company (NDPHC).

    According to a status report on Nigeria’s power sector presented by the NDPHC to the government of President Muhammadu Buhari, SGCC made the offer in consortium with its other partners, CET Power and Westron. Under the programme, the NDPHC will commit about $600 million to the transmission project. Presenting the status report to the government, NDPHC’s Managing Director James Olotu said the transmission projects are 15 of the 114 that will not be completed in the first phase of the NIPP due to intractable way-leave issues and cost escalations.

    They have, however, been transferred to the second phase of the NIPP for consideration and approval by the board. It is these projects and a couple of others that SGCC and its other partners have indicated an interest to fund. The status report showed that within the prevailing transmission challenges of the power sector, SGCC’s funding portfolio in the sector could rise to $18 billion if the government resolves inherent challenges in projects’ financing in the transmission network, vis-à-vis the country’s power sector.

    That is not all. The largest coal to power company in China is interested in coming to invest in Nigeria. Many big companies who are into power generation and transmission have indicated their interest in investing in Nigeria. A Chinese firm and two local investors have since concluded arrangements to inject $10 billion (about N1.99 trillion) into the manufacturing of lighting equipment and accessories to boost electricity supply in Nigeria.

    Under the deal, seen by energy experts as the wedge for solar energy adaptation in the country, Hongye-Sinari Group, Niger-Sino Industries Limited and Hamaded Logistics will build a solar energy accessories’ plant, which, when operational, will serve industrial and housing estates, schools, hospitals and malls.

    The investment, according to the Director, Energy Generation, Hongye-Sinari Group, Mr. Xu Rongchang, will bail Nigeria out of its power problems.

    Addressing members of the Organised Private Sector (OPS) in Lagos, Head of the Chinese delegation, Mr. David Yang Xoaohua, said the Chinese firm has branches in over 100 countries with over 5,000 workforce, and investible fund of over $10 billion. He said with such enormous funds, the company, which is also into the manufacture of agricultural equipment, needs clear rules of engagement, an enabling environment and a good legal framework that protects investors and investment.

    Xoaohua added that after a careful study, the firm has come to the conclusion that Nigeria, being the largest economy in Africa, remains the best place to invest with high returns on investment. Noting that the companies specialise in the manufacture of lighting equipment and accessories; solar energy, he affirmed China’s commitment to a significant role in the energy sector.

    He said: “Our aim is to help the nation in the areas of infrastructural development and the mechanisation of its manufacturing process, develop the energy sector to boost manufacturing and other forms of businesses. It’s a win-win situation as it provides opportunity for massive employment generation. This is one area we learnt the government is working hard to bridge. There will be no case of dumping of fake and substandard goods as we will set up our manufacturing plant.”

  • China needs economic reforms, says EU

    China needs economic reforms, says EU

    The European Union Chamber of Commerce in China has said China needs to accelerate its reforms to stop the slide in its economic growth.

    “The economy is slowing, and promised reforms are taking too long to implement,” the chamber’s president, Joerg Wuttke said.

    The yearly increase in Gross Domestic Product (GDP) has slowed to around 7 per cent, cooling the enthusiasm of many foreign investing companies.

    “It’s not the end of the world for us,” Wuttke said, ahead of the release of the chamber’s annual position paper, European Business in China.

    “One of the most urgent problems was the high level of China’s debt,” he said.

    The country’s total debt is estimated at 282 per cent of GDP, according to financial consultants McKinsey.

    “Around a fifth of the debt is held by government bodies, and nearly a quarter by financial institutions, with 44 per cent by non-financial corporations, and the remaining 13 per cent by households, ‘’Wuttke said.