Chinese investment: A booster to Nigeria’s economy

By Nduka Uzuakpundu
Nigeria’s President Muhammadu Buhari had a genuine cause, recently, to laud China for her rising investment in the country. China, he said, was a friend of Nigeria – and Africa, in general. At a time of a deep recession, between 2015 and 2017 – the first two years of the Buhari administration – the economic indices of growth, especially local and foreign direct investment (FDI), were an active player.
China’s belief, as her investments poured in, was that the Nigerian economy was the resilient kind and was sure to bid recession a healthy good-bye, in the not-too-distant future. Currently, one of the good news is that Nigeria has, somewhat guardedly, eased out of recession. That steels the confidence of the Chinese, as one of her faithful allies in international trade and investment.
As the post-recession era takes a healthy shape, there has been a gradual rise in the price of crude oil, from which Nigeria’s economy depends for nearly 90 per cent of its exchange. Buhari’s response to the growing Chinese investment in Nigeria is in recognition of the role that is still expected of Beijing, as Abuja tries to wean its economy away from being too reliant on crude oil, which has its obvious disadvantage in the inherent unpredictability of the price of the product in the international market.
In 2017, a year after Buhari’s visit to China – about a year after he was sworn in, as the fourth president of the Fourth Republic – Chinese investments in the country grew by 35 per cent.
That level of investment had a greater part of its roots in Buhari’s 2016 economic-diplomacy visit to Beijing. Buhari has been followed by the likes of Edo State governor, Godwin Obaseki. His trip to China, recently, has attracted investors from the world’s second largest economy to the state’s inland dry port and sea port projects. Some Chinese investors have had some discussions with the Minister of Power, Works and Housing, Babatunde Fashola, on the possibility of their participation in the country’s power project, through the Mambilla dam.
A  Chinese Consul-General in Lagos, Chao Xiaoling, said that, “China has already invested or financed a total number of $22billion projects in Nigeria; some projects worth N23billion are ongoing. With more than $40billion investment almost in, such sectors as road construction, manufacturing, pharmaceuticals, dry port, agriculture and railway, Buhari finds, in Chinese investors, reliable allies in his administration’s determination to diversify the Nigerian economy.
With the world’s second largest economy, China has found a good market in Nigeria, as she has in some other African countries. From enforced ideological seclusion for four decades, up to oneness in 1978, and an annual economic growth of nearly 9 per cent, in the past fifteen years – at a time when most leading world economies in Asia, European Union and North America, have wrestled with diverse bouts of recession – the thinking of China’s economic policy-makers is to promote South-South co-operation with a touch of renaissance, in which investments in billions of dollars, in crucial economic sectors are sure to yield encouraging profit.
China’s growing influence in Nigeria’s economy will be manifested and appreciated, in that direction, as they create jobs and wealth for the country’s soaring population of youths, especially products of tertiary institutions.
Today, China is an active player in the haulage and logistics sector of the Nigerian economy: Sino trucks are regular fixtures on Nigerian roads, as they haul cement, agricultural products, textiles, computers, auto spare parts, soft drinks and spirits, etc. to mainly ready markets in urban centres.
Ask the policy-makers at the Dangote Group and most of the top players in the country’s oil and logistics sector, they’ll tell you that they are consumers of Chinese industrial vehicles. In the aviation sector, too, you’ll find the Chinese: in the expansion of the Murtala Mohammed International Airport, say.
Nigerians are well aware that in Lagos, for instance, the rail lines being constructed from Badagry to CMS on Lagos Island, is by China Civil Engineering and Construction Corporation (CCECC.) It, too, is a top player in the Lagos-Ibadan standard-gauge railway project. The blue, mass transit buses in use in the Lagos metropolis, are Chinese products. The Lagos State Government hopes that with such a unique mass transportation project, it would, ultimately, take a fairly visible number of cars off the ever-busy major roads of Lagos – in its effort to help the time-consuming, traffic gridlock, for which Lagos is famous!  The skippers of the Computer Village, at Ikeja, in Lagos, can testify honestly that the Lenovo computer, that is produced in China, is a popular brand, and is competing favourably with such well established brands as Dell, HP, Toshiba, etc.
Indeed, China is the second largest buyer of Nigeria’s crude, after the United States of America. But Beijing finds the business a bit costly, on account of the distance and time it takes – for nearly six weeks – in howling seas, for crude oil lifted from the Gulf of Guinea to reach its destination in China, after passing through the Cape of Good of Hope at the southern-most tip of the continent to the Indian Ocean.
Part of the challenges that China has faced, in recent years, in lifting Nigeria’s crude oil, is the insecurity posed by pirates to seamen and merchants ships off the coast of Somalia. Otherwise, she would have opted to do the same business with the oil giants of the Middle East – Saudi Arabia and Iran. That would have saved some visible cost of transportation of the black gold.
She would have felt a lot better were there a shorter land root – possibly an arm of the Trans-Africa Highway – from Nigeria to Mombasa port in Kenya, in East Africa, where such crude oil would be loaded into ships for transportation to China. All that would have shed about 15 per cent of transportation cost and about two weeks from the long journey.
And yet, all that has not discouraged Beijing’s interest in Nigeria’s crude oil. Chao points out that, “accompanying nearly $40 billion investment, Chinese technology, management and experienced talents have also flooded Nigeria, which has greatly boosted the diversification and development of her economy. The contribution and effect of Chinese investment can be seen everywhere.”
China’s inroad into Nigeria’s economy is a product of her three trillion dollar foreign reserve, which is predicated on economic discipline, transparency amongst her economic policy-makers and managers, who are members of the ruling Communist Party; diligence on the part of her workers and the budgetary astringency. In the next three decades, Sino-Nigeria trade ties would remain solid, with nearly $50billion in Chinese investments – with still special focus on infrastructure – in Nigeria.
Today’s balance of trade, which tilts very well in Beijing’s favour, is expected to turn marginally towards Nigeria, as she pursues a post-recession policy – alongside an increase in the price of crude oil. Both sides are guardedly optimistic that the decay in the Nigerian economy, especially in the oil, road, aviation, railway and agriculture sectors, would be arrested – even well after the end of the Buhari administration.
Chao said that there was a pressing need for good roads – all-season roads that would be maintained regularly – and railway system to ease the movement of goods and mobility of labour, capital and means of production. What that presupposes is a conscious reflection of the Chinese economic practice of transparency and good governance, so as to justify workers’ and tax-payers’ confidence in public administration, from which Nigeria hopes to benefit.
With Nigeria, China is a big player in the continent’s economic development. Beijing, it does seem, has overtaken some of the traditional aid donors – Britain, Canada, United State of America, Japan, Sweden, Germany, the Netherlands, etc. – in terms of partnership with Nigeria in the cause of trade ties and her economic development. Since the dawn of the Fourth Republic, Beijing has been buoyed to invest hugely in the Nigerian economy, because hers is a new democratic dispensation, in which elected deputies and government would place feed tax-payers’ funds into capital-intensive projects.
As she invests in key sectors of some leading African economies, stretching from East Africa to the West, Beijing has established some friendship with African leaders. She’s seen as the largest investor in the continent; having beaten the World Bank and International Monetary Fund (IMF). That may well explain the confidence with which she gathers African leaders in Beijing, at certain times of the year, for a summit, at which progress reports are made and discussions held, on how well to sustain Beijing’s unrivalled economic interests in Africa.
Beijing believes that by investing ambitiously in the infrastructure sector in Nigeria – and successfully, too – it would be wooed by other African countries. That, in recognition of Nigeria’s leadership position in African politics and economics. That, again, offers a topic in the study of Beijing’s role in Nigeria’s economic history. China sees Nigeria – in spite of some uneconomic developments like the insurgency, Boko Haram, herdsmen-farmers clashes in the Middle Belt and occasional dislocation of the oil industry in the Niger Delta by armed elements – as her gateway to the outside world.
Apologists of the Sino-African Economic Development Summit argue that it’s an occasion for Beijing to gauge the disposition or sincerity of African governments in accommodating foreign direct investments from China. “It’s some of muscle-flexing or pressing an element of acquired authority in Africa’s leading economies,” is the view expressed by some economists and political commentators.
As Chinese deputy ambassador to Nigeria, Lin Jing, pointed out, when he led a delegation to the National Assembly to strengthen Sino-Nigeria relationship, “the $1.3 billion Lagos-Ibadan railway project is yet another demonstration of China’s commitment to Nigeria’s development.” Then, he added that Beijing had been through the proposed $326 million, 30 rice-mill projects in various parts of the country, the China EXIM Bank-funded $984 million Zungeru hydro-electricity project, in Niger state, and the $450million for the construction of Keffi road, in Nasarawa state.
Thus, via Nigeria, China would seem to have broken the record of foreign direct investment. The story for the rest of Africa is no less readable. Beijing’s entrepreneurial odyssey in Nigeria is coming at a time when most North American and European countries, appeared to have lost interest in the her economic development, in part, because of graft; in part, besides, because they feel Nigeria is not, truly speaking, a poor country that should be aided, financially, and with investments, as was, understandably, the case in the first three decades after her independence from Britain, in 1960.
They argue that she’s a vastly-rich country, whose basic development and good governance challenges are the products of unrelieved bad leadership. It’s that hiatus that Chinese FDI is filling. And the interesting narrative is that Abuja and Beijing would partner, for the foreseeable future; if not for their continental records of largest populations, economies!