Nigeria, China Is China taking advantage of Nigeria with loans and grants?

The Chinese have provided grants for major infrastructure projects, but that has only opened the doors to more sub-standard products and a trade imbalance.

  • Published:
play Nigeria's Buhari shakes hands with China's Li Xinping after discussions over a Chinese-funded housing project. (ThisDay)
24/7 Live - Subscribe to the Pulse Newsletter!

One of the most common Nigerian stereotypes is that you will find an Igbo man everywhere; but apart from a courageous few, who visit mostly for trade, China is one of the last destinations that any Nigerian would consider.

The gulf between the two countries is obvious in everything; Nigerians don't listen to Chinese music; except there are deadly fight scenes, the attitude towards movies isn't different. The two countries are so distant, in culture and relation, that you will have a hard time finding a Chinese-Nigerian that isn't named Adesuwa Aighewi.

Yet, as Nigeria tries to work its way to a future where railways actually work and roads are not part-time death-traps, it is our Chinese friends who have extended an olive branch and the password to their ATM card.

Nigeria’s relationship with China goes back a few years. In 1971, the two countries established diplomatic relations. At the height of the oil boom, Nigeria’s production helped meet the Chinese demand for oil; and in turn, the Chinese gave political and economic support.

Fast forward by a couple of decades; in 2004 and 2006, the then-Chinese President Hu Jintao visited Nigeria. He addressed a joint session of the National Assembly, and more importantly, signed a memorandum of understanding establishing a strategic partnership.

ALSO READ: These will be the 21 most powerful economies by 2020

That MOU marked the beginning of the new phase of Chinese-Nigerian relations. While the Nigerian government makes attempts to raise money from recovered loot and other questionable means, China has proved Nigeria’s most important economic ally.

play China's ambassador to Nigeria, Zhou Pingjian meets Nigeria's Minister of Foreign Affairs to discuss China-Nigeria relations. (Presidency)

 

During the visit of then-Chinese President, Hu Jintao in 2006, China secured four oil drilling licenses and agreed to invest $4 billion in oil and infrastructure development projects in Nigeria.

The same year, China also agreed to grant a loan of $1 billion to Nigeria to help it upgrade and modernize its railway networks.

China has also pledged to invest $267 million to build the Lekki free trade zone near Lagos. The Buhari administration has extended the friendship further, such that loans from the Chinese have funded the most important infrastructure projects in the last two years.

On the surface, it is easy to see this as a favour borne out of love and pity; especially when you remember the early months of 2016 when Nigeria’s leaders went on a world tour of mercy and compassion, soliciting help from other nations.

However, China’s friendly dealing with Nigeria is part of an agenda that dates back years before the first world war, before Flora Shaw was inspired to name a country she had little knowledge of.

Even though China has always been a major world power, it was always prone to attacks from foreign nations wary of its expansion and might; by Mongols, Japanese and later, the West.

ALSO READ: Nigeria is one of the global investment destinations for 2018

Following its defeat in the Second World war, the Asian power lost most of its influence and power to the victors, the United States and its European allies.

It spent the next few decades through a hyper-communist regime focused on protecting itself and getting it back to its former glory.

America’s influence spread around the world leading into the 70s and 80s. By the time China was strong enough to spread its influence, there were few willing allies left.

By the end of the cold war, China re-evaluated its foreign policies. The increase in military governments in Africa found few allies in the West, and China presented itself as a non-imperial alternative. It funded projects, assisted with weaponry and gave aid to troubled spots.

 

That relationship was further elucidated in 1996 when the then-Chinese president, Jiang Zemin visited six African countries and gave a speech at the OAU.

Today, foreign policy and economy experts have touted China to be the world’s next superpower.

With America adopting a more nationalist stance under Trump, the spread of Chinese money, bridges, roads and construction companies is a political decision.

China's Africa Policy Document states, "Sincerity, equality and mutual benefit, solidarity and common development — these are the principles guiding China-Africa exchange and cooperation and the driving force to lasting China-Africa relations.

Due to its own historical suffering from foreign invasions, China’s foreign policy is hinged on the principles of sovereignty and equality.

As its presence increases in Africa, it is making important allies with African states who still resent the West’s colonialist legacy and the domination of western culture.

China is presenting itself as the friend who will help them develop, without foisting its ideals, beliefs and culture.

On the other hand, however, there’s a lot of money leaving Nigeria for China. A lot more than China is giving the country in loans and grants.

Bilateral trade between Nigeria and China rises every year; as its stands, China is Nigeria’s biggest trade partner. In 2006, trade between the two nations stood at US$3 billion in 2006 — up from $384 million in 1998.

play China's NEXIM bank is the lead investment partner funding Nigeria's railway project. (Africa Check)

 

This year, the Charge d’Affairs of the Chinese Embassy in Nigeria, Qin Jian revealed that the bilateral trade volume between China and Nigeria from January to July 2016, stood at $6.46 billion.

On the surface, these are impressive numbers, but the details are troubling. China has benefited from the trade relationship in absurd ways; between 2013 and 2015, Nigeria imported 780% more from China than its exports to the Asian nation.

ALSO READ: Maybe the future of Nigeria will be Made in Aba

The situation is so evident that President Muhammadu Buhari addressed it at the opening of a Nigeria-China Business/Investment Forum in Beijing in 2016.

Although the Nigerian and Chinese business communities have recorded tremendous successes in bilateral trade, there is a large trade imbalance in favour of China as Chinese exports represent some 80 percent of the total bilateral trade volumes. This gap needs to be reduced.”, the President said.

Therefore, I would like to challenge the business communities in both countries to work together to reduce the trade imbalance."

You must also imbibe the spirit of having a mutually beneficial relationship in your business transactions.”, he emphasised.

You must not see Nigeria as a consumer market alone, but as an investment destination where goods can be manufactured and consumed locally,’’ Buhari said.

A year later, there is nothing to indicate that things have changed.

As some worry about the quantity of trade, the quality of the products that China sells to Nigeria has also come under question.

In 2016, an internet cafe, belonging to Emeka Ezelugha was razed after a fire broke put in a corner of the main room. 30 computers were destroyed; Chinese-made power strips were named as the culprits.

The guy tried to convince me it was from the U.K. — I was surprised when it happened,” Mr Ezelugha told the New York Times.

play Products like these counterfeit Beats By Dre headphones have become a staple in the Nigerian market (YouTube)

 

Besides stories like Ezelugha’s, the substandard quality of Chinese-made products is something that most Nigerians are already familiar with; so much that, “Chinko”, the informal term for China is also used to refer to substandard products.

That your shoe na Chinko; no be original”.

Despite this, most Nigerians still view China in a favourable light. According to a 2014 BBC World Service Poll, 85% of Nigerians view China’s influence positively, with only 10% expressing a negative view, making Nigeria the most pro-Chinese nation in the world.

That aside, the intricacies of China-Nigeria relations are not in Nigeria’s favour, as things stand.

Without the country’s assistance, much of Nigeria’s infrastructure projects would come to a standstill, or die altogether.

Yet, the only outcome is a form of economic imperialism that will defeat the purpose of improving local capacity.

Do you ever witness news or have a story that should be featured on Pulse Nigeria?
Submit your stories, pictures and videos to us now via WhatsApp: +2349055172167, Social Media @pulsenigeria247: #PulseEyewitness & DM or Email: eyewitness@pulse.ng. More information here.