President Goodluck Jonathan’s ongoing five-day state visit to the People’s Republic of China has, once more, brought to the fore the seemingly Chinese quest to supplant the United States as Nigeria’s largest trading partner, writes Assistant Editor (Investigations) ADEKUNLE YUSUF
It is a win-win game, or so it seems on the surface, especially if the kernels of the arguments by the Presidency are cobbled. At least, that is the way public information handlers of the ongoing state trip to China by President Goodluck Ebele Jonathan have framed the visit. Expectedly, in the trip are some state governors and senior cabinet members. As a way of dousing the fire of criticisms that the five-day state visit to China was hurriedly put together to spite United States President Barack Obama who excluded Nigeria from his recent tour of some African countries, the Presidency insisted that the trip, which it said has been planned a year ago, is not a jamboree.
According to presidential spokesman Dr. Reuben Abati, the trip to the world’s second largest economy would help establish a lasting rapport with Chinese President Xi Jinping.
Abati said: “China is a very important country. China is the largest market in the world, with its 1.35 billion people. China is also the world’s largest creditor nation. China is also the largest importer and exporter of goods and it is a large consumer of primary commodities, including crude oil. In fact, after the US, China is the largest importer of crude oil in Nigeria. So, it is in our strategic national interest to have very good relationship with such a country.
“We have excellent relationship with the U.S. and the truth of the matter is that nobody can overlook America. The claim that the China trip is a response to the fact that Obama did not come to Nigeria is also not true because this trip was planned one year ago.”
Although it is an open secret that China is increasingly winning the heart of Nigeria, it is also a statement of fact that America remains Nigeria’s strategic trading partner, despite the determination of the U.S. to cut down on its crude oil imports. As a measure of the country’s importance to the U.S., facts show that the Foreign Direct Investment (FDI) has increased in the last few years, upping from $5.2 billion in 2000 to $8 billion in 2012. At a presentation on investment promotion strategies at the regional seminar for heads of missions in the Americas held in New York , Nigeria’s Ambassador to the U.S., Prof. Ade Adefuye, said the country has benefited tremendously from a diversification of investments from the oil and gas sector to other key non oil sectors, which he said Nigeria has witnessed in the last few years. The professor of history identified the lucky sectors to include power, energy, agriculture, hospitality, housing, and health care, among others. In agriculture alone, the envoy said Nigeria has witnessed huge inflow of FDI under the platform of the Nigerian/U.S Bi-National Commission working group, adding that figures showed that there is $6 billion FDI flow into Nigeria’s agriculture came from the U.S.
Adefuye said: “During the past ten years, Nigeria’s economy has expanded at an annual average rate of over 6.5 percent. This is well above the South Saharan Africa’s average of 5.6 percent from 2001 to 2011. From 2009 to 2011, Nigeria has had an average growth of 7.5 percent compared to the World growth of 2.8 percent.
“Nigeria is an emerging market and for the past decade, 2000 to 2011, Nigeria’s average growth rate has been the third fastest among the ten emerging market countries behind only China and India.”
To achieve the feat, the envoy said several methods were employed in carrying out the mandate of attracting FDI into Nigeria, including various institutional platforms already existing between the two countries. With this, the total U.S./Nigeria trade was valued at $38.5 billion in 2011, which represents a 12 percent increase from 2010, largely due to higher oil export volumes and prices.
In 2011, the U.S. imports from Nigeria were valued at $33.7 billion, consisting almost entirely of crude oil. “The U.S. non oil imports from Nigeria consisted primarily of agricultural products such as cocoa, tobacco, rubber, feeds, grains and nuts,” Adefuye said.
The envoy added that Nigeria was the world’s largest importer of U.S. wheat, valued at $1.2 billion in 2011, adding that other goods imported from the U.S. are vehicles, valued at $1.1 billion; machinery at $270 million; mineral fuel oil at $597 million, and plastics estimated at $87 million. Even the much-criticised Obama trip to Africa had some good news for Nigeria, despite the fact that he shunned Africa’s most populous country.
Last month, during the second arm of his three-nation Africa tour, Obama announced a five-year $7 billion power initiative, which, he said, was intended to help double access to electricity in Sub-Saharan Africa, Nigeria inclusive, where electricity supply is at a low ebb. The funds will come mainly from a U.S. trade promotion bank. In addition, another $9 billion of pledge from the U.S. private sector has been secured. This power plan will initially cover Ethiopia, Kenya, Tanzania, Nigeria, Ghana and Liberia. The Power Africa Initiative is a five-year partnership between the United States, six African governments and the private sector. The partnership represents a coordinated cross-border effort to build the regulatory, economic and policy foundation in order to double access to power in Sub-Saharan Africa, seeking to add more than 10,000 megawatts of more efficient electricity generation capacity – equivalent to 250 per cent of Nigeria’s current power generation – increasing access to electricity by more than 20 million new households and businesses.
If these reveal America’s continued relevance in the scheme of things, China too has presented itself as a dependable ally. There appears to be a lot at stake if China and Nigeria cooperate and seal a mutually beneficial partnership on important issues, ranging from infrastructure, economy, power (energy), agriculture and telecommunications, among others. Hinting at these huge prospects ahead of the trip, Minister of Finance and Coordinating Minister for the Eeconomy Dr. Ngozi Okonjo Iweala said Jonathan looked forward to increased Chinese investment and trade in Nigeria. And for this to happen, she added that the trip would finalise $1.35 billion in low-interest loans for infrastructure, such as airports and hydropower plants.
The loans, she said, are part of the $3 billion approved by China at less than three percent interest rate. Coming at the backdrop of the fact that the US demand for oil has fallen, leaving China and India to take up the slack, the relationship is necessary, especially now that “China is desirous of increasing its lifting of Nigerian oil.”
China has, over the years, been quietly exhibiting its interest and commitment to Nigeria’s economy by partnering stakeholders to plant several laudable development projects in the nation’s critical sectors. From the vast North to the arable grassland of the South, imprints of the Chinese are increasingly becoming visible everywhere. Interestingly, one of the beneficiaries of this renewed Chinese interest in Nigeria is the Federal Capital Territory (FCT), where residents are daily punished by traffic gridlock. But if all goes according to plan, a multi-billion dollar light rail project will soon link Abuja to Kaduna, which will certainly reduce the suffocating burden of commuters who daily experience unpalatable commuting stress. Apart from easing the traffic pressure, it will also help FCT decongest its rising population, since people who live outskirts the city can easily commute to and fro. Rather than finance it entirely from its budget, the FCT administration under Bala Mohammed will have the project financed, built and delivered by the China Civil Engineering and Construction Company (CCECC), which will pay the large chunk of the fund for this all-important project. Thanks to a loan (with interest rate put at below market rate) sourced from the state-owned Ex-Im Bank, which is providing $500 million of the $629 million cost of the project, the construction is billed to be completed latest by 2014 to the delight of FCT dwellers. Besides this, a World Bank report also added that China has set aside another $2.5 billion for the rehabilitation of the all-important 1,315-kilometre Lagos-Kano rail line. All this is geared toward helping to revamp part of the nation’s ailing transport infrastructure.
Also critical in the relationship with China is the power (electricity) sector. Going by estimates, it is said that about 1000 job opportunities will be open in the next four years for residents of Zungeru, Niger State, as a hydropower plant contract is finalised between China and Nigeria. All seems to be pointing towards the possibility that the plant, which will be handled by two Chinese firms, will be sited in the state. What this means is that Nigeria will soon be better off with additional 700 megawatts that the project will add to the national grid. That is not the only good news. As it is doing with the light rail project, the same Ex-Im Bank is financing the project, having supported the initiative by providing 75 percent of the required fund.
More Chinese companies are becoming big players in the economy, garnering stupendous share of the market in the service sector, including telecommunications. A statement by the Chinese embassy in Nigeria said no fewer than 30 Chinese companies operate in the country, employing thousands of Nigerians. The official estimate was put at 40, 000 people. In the retail segment of Nigeria’s economy, brands such as Alcatel, Viju Milk, and Huawei, among others, have become household names. From bakery to hotel business, China has also shown that it is indeed a giant, for many of its firms in the country are daily churning out products that meet the fancy of Nigeria’s market. Another measure of the weight of the Chinese presence in Nigeria is reflected in the textile and manufactured products. The popular China Town, established in 2005, has snowballed to become a one-stop shopping centre for all goods, such as jewelries, electronics, textile materials, shoes and kitchen utensils.
By the end of 2010, a whopping $8 billion FDI came from China to Nigeria, through in infrastructure and urban renewal programmes.
The impact of China in Nigeria is even more important when the former’s investment in the latter is juxtaposed with what happens in other African countries. According to the World Bank, Nigeria accounts for 30 percent of total Chinese investment on the continent. From $4 billion in 2006, investment between the two countries increased to $8 billion in 2010 and peaked at $13.3 billion 2012, which is a more than 100 percent increment. With this, Nigeria has emerged as China’s fourth largest trade partner and second largest export market of China in Africa. The volume of trade between Nigeria and China in 2009 stood at $6.4 billion. While Nigeria’s export to China was valued at $0.897 billion, China’s export was $5.5 billion. However, the result has not fared any better since 2010 when China’s imports reached $6.99 billion.
Another highlight of the growing confidence of China in the economy of Nigeria is the recent conversion of $500 million, a fraction of Nigeria’s foreign reserves, initially domiciled in American dollars, into Yuan (the Chinese currency) by the Central Bank of Nigeria (CBN). Describing the conversion, which was done over a six-month period, CBN Governor Lamido Sanusi said it was inevitable, thus signaling the country’s readiness to start receiving payments for its oil exports in Yuan.
Sanusi said the country looked beyond the present in taking the decision.
He said: “It will be almost living in a dream world to ignore China. It is the second largest economy in the world and it is well-managed.”
