With stakes worth billions of dollars in businesses ranging from agriculture to oil, gas, and construction, China’s Greek-gift economic assistance is increasing unemployment and worsening job creation in Nigeria. THISDAY investigations revealed that China’s exploitative business model is hinged on economic sabotage and security breaches. Adedayo Adejobi reports
In Nigeria and across Africa, Chinese investments evoke and provoke widespread suspicion of a new form of colonialism as well as praise, but for the most part, their coming and stay, attract undue attention, privileges whilst they flout existing operational guidelines and prevailing business principles by hook or by crook.
As China emerged as a significant world economic power, its own need for natural resources increased. To meet its demand, China is importing vast amounts of resources such as copper and oil from Africa to feed its production of furniture, wood processing, medicine, computers, transportation equipment, and textiles. They have stakes worth billions of dollars in everything from agriculture to construction.
China’s investments in Nigeria’s economy have also hindered political reforms in the country. China’s economic assistance is increasing unemployment and worsening job creation in Africa. In the midst of the investments, exports, and new infrastructure, China is blatantly ignoring its promise to bring about change.
Chinese firms in Nigeria also practice illegal methods to achieve their goals. For instance, by law, mining on small plots of 25 acres or less is restricted to Nigerian nationals. However, China continues to explore for gold and other precious stones in conjunction with local landowners, even though regulations have made it clear that such practice is illegal. The methods in which they exploit Nigeria’s resources are endless and affect the local and domestic economy.
Chinese corporations are all over Africa. In June 2017, a McKinsey & Company report estimated that there are more than 10,000 Chinese-owned firms operating in Africa.
The reason Chinese corporations are in Africa is simple; to exploit the people and take their resources. It’s the same thing European colonists did during mercantile times, except worse. The Chinese corporations are trying to turn Africa into another Chinese continent.
They are squeezing Africa for everything it is worth.
Globalization managed to skip Africa by for years. There were several reasons for this. Africa was considered to have poor infrastructure, political instability, and low income. “The trade in oil, gas, gems, metals and rare earth minerals wreaks havoc in Africa. During the years when Brazil, India, China, and the other “emerging markets” transformed their economies, Africa’s resource states remained tethered to the bottom of the industrial supply chain.
Everything changed when China came along. The country was desperate for raw materials and energy to power its growing manufacturing capacity. The continent was placed right next to Shanghai in terms of Beijing’s business priorities.
Africa was at the top of the Beijing economic agenda. It was an easy and convenient target. Chinese leaders sent business delegations toevery capital in Africa year after year. These delegates secured infrastructure projects and proposed trade deals, converting Africa into a “second continent” for China, metaphorically, speaking.
The long arm of globalization has no doubt touched Nigeria and the rest of Africa. Trade between China and the “second continent” of Africa reached close to $300 billion in 2015, but China has become better for it.
According to President, China Chambers of Commerce in Nigeria, Mr. Ye Shuijin, the quantum of investment in the Nigerian economy by Chinese companies has hit $20 billion. This humongous figure is traceable to
over 160 Chinese firms operating in the country which also employed less than 200,000 Nigerians. For every Chinese factory in the hinterlands of Nigeria, the Nigeria workforce is not usually more than seven percent, of which engage in the menial and lower rung of the ladder jobs. It’s such a pathetic situation that Nigerians are slaves in their country to Chinese exploiters!
There is a large population of Chinese people in Nigeria comprising Chinese expatriates and descendants born in Nigeria with Chinese ancestry. As is the norm, the Chinese men impregnate young naïve Nigerian girls and run back to their countries without recourse to the children and women they have put in the family way. As of 2012, there were approximately 20,000 Chinese in Nigeria.
Shuiji asserts that the companies were promoting what he called the ‘people to people’ cultural diplomacy of the Belt and Road Initiative of the People’s Republic of China in Nigeria.
To many Nigerians, Shuiji’s sermon is far from the gospel truth, going by the gory tales of the rather mean, conniving and unethical ways and means many Chinese companies expand their nests in doing business in Nigeria. Their perfidy ranges from labour casualization, tax evasion, customs duty under-payment, forgery and outright sabotage.
Like a virus, observers argue that these Chinese enter a sector of the economy with inferior products far below the obtainable market value, with a view to running out the key players. They then suck out the vitality through all manner of infractions and castrate the sector.
After ‘death’, they emerge as a monopoly in the sector. The dead textile sector is a huge pointer to the Chinese economic mass destruction in Nigeria.
It is indeed alarming that Nigerian regulatory agencies such as the immigration, customs, Nigeria Drug Law Enforcement Agency amongst others, turn a blind eye to the Chinese impostors who wield, engage and operate the most dehumanizing labour force and conditions, which are at variance with national and international best practices. There are countless testimonies of Nigerian workers, who are paid meagerly, whilst a large chunk frequently loses limbs and sometimes, lives.
Chinese employers from inception could care less.
An instance is a gruesome incident in Ikorodu, Lagos, some few years ago. The Chinese owner of one of the many plastic industries they own had to lock the workers inside and went to sleep in his own apartment.
When a fire broke out in the night, the workers were trapped since the door was bolted from the back, leading to the death of scores of the
helpless and hapless workers. It is relieving to know that the Lagos government moved in to close down the factory, while the owner disappeared.
After the initial outrage had subsided, a lawyer filed a suit against the closure and after a weird legal tango, the matter died and the deadly factory owner moved on.
The Nigeria Labour Congress, the umbrella association of workers in Nigeria and the organised private sector have shouted themselves hoarse over this perfidy with little success.
In February, the Importers Association of Nigeria (IMAN) special task force on illegal importation, (South-west Zone) sealed off five Chinese warehouses over trade infractions. The group also disclosed that a total of ten containers of 6 by 20ft and 4 by 40ft with various infractions ranging from concealments, smuggled goods were intercepted from various parts of Lagos State.
Chief Operating Officer (COO) of IMAN Special Taskforce, Prosper Okolo, said some of the affected warehouses were found to have contravened import laws and duty underpayment.
Okolo noted that some of the warehouses visited by the team involved in the illicit trade are owned by foreigners, mostly Chinese, adding that five suspects have been arrested in the last two months.
While highlighting some of the companies allegedly involved in some of the despicable activities, the COO fingered Megachem Nigeria Limited, Kevolinks Digital Limited, Kwikfit Nigeria Limited, Inomek Nigeria Limited and Bosac Nigeria Limited as some of the arrowhead perpetrators.
Okolo noted that “Asides the concealments, some of them short paid the government to the tune of billions of Naira.
“Between January and February, the task force also received credible intelligence of some warehouses involved in production and importations of fake and sub-standard products without approval from the Standards Organisation of Nigeria (SON) and National Agency for Food, Drugs Administration and Control (NAFDAC).
“The task force has so far sealed five warehouses which were found to deal in the importation of tyres, used clothing, unwholesome products among others without the required regulations and permits.
“The association is collaborating with the Nigeria Police Force (NPF), through intelligence and enforcement of its mandates to checkmate illegal activities of smuggling, fraud, illegal importations, forgery, concealments, and other economic sabotage.
“These acts, the task force sees as not only economic sabotage, but also endangering the lives of Nigerians as these tyres, though new, have lost their value due to the way they were concealed and imported into the country.
“At this point, we want to reiterate that, the IMAN Special Task Force is not out to witch-hunt anybody or organizations, neither is it to challenge or rub shoulders with any agency of government.
“The Task Force is out to complement the efforts of government agencies to rid our country of nefarious activities perpetrated by unpatriotic Nigerians and their foreign collaborators who deprived the country of not only required revenue but also post danger to the health of Nigerians.
“Our appeal goes to the importers, clearing agents and manufacturers to please abide by the country’s regulatory and fiscal requirements in carrying out their businesses.’’
”It is on this note we also appeal to members of the public to avail us with the necessary information regarding import frauds, forgeries, concealments and smuggling activities that will expose these economic saboteurs of their unpatriotic acts.”
Despite the efforts of the Task Force and other government agencies, the Chinese perfidy seems to be extending its tentacles, to other sensitive national economic interest and national security.
In fact, Mckinsey, a global consulting firm, says out of the 930 Chinese companies operating in Nigeria, only 317 are documented by the Chinese ministry of commerce.
According to a new research report titled ‘Lions on the move II: Realising the potential of Africa’s economies’, there are over 10,000 operational Chinese firms spread across the manufacturing, construction, trade, services, and real estate sectors in Africa.
Mckinsey said these firms employ less than 200,000 local workers and as of 2015, a third of them reported about 20 percent profit.
Recently, a red flag was raised about the malfeasance of another Chinese company, Zhe Long Investment Limited. The company, according to search at the Corporate Affairs Commission, was incorporated in Nigeria on the 11 January 2018 with an official address at 4, Eric Moore Road, Surulere, Lagos. Although its official address is in Lagos, it operates from Ogun State without any traceable website or online footprints.
Zhe Long, owned by two Chinese namely, Wang Fuzeng and Chen Yuping, has as its main objective: “To carry on business as manufacturer, buyers, sellers, traders, importers, exporters, merchant exporters, departmental stores, distributors, stockists, dealers, packers, re-packers, and agents for all sponge mats and foam products.”
The report revealed that the perfidy from Zhe Long ranges from false declaration, tax evasion, forgery, illegal immigration, concealment, and customs duty evasion.
For instance, it is alleged the commercial sales invoices of the company are not VAT-compliant since there are no VAT number and amount declared on the document. This to tax experts constitutes a serious breach of the law by Zhe Long and its customers.
Apart from this, the investigation revealed that there are about 30 Chinese semi-skilled/manual workers operating in the company. A source in the company revealed that none of these workers has formal CERPAC documentation, which is a clear breach of the nation’s immigration law by both the company and the illegal immigrants.
In the areas of import and shipping documentations, sources revealed that Zhe has been falsely declaring a chemical known as Polyol as Polyacetals. Polyols are a group of low-digestible carbohydrates derived from the hydrogenation of their sugar or syrup Polyols react with isocyanates to make polyurethanes, which find use to make mattresses, foam insulation for refrigerators and freezers, home and automotive seats, elastomeric shoe soles, fibers (e.g. Spandex), and adhesives.
On the other hand, polyacetal is an engineering thermoplastic used in precision parts requiring high stiffness, low friction, and excellent dimensional stability. It is among plastic materials, with the most crystalline structure. It is also is known for its good fatigue/creep resistance, low friction and good performance in cold temperature.
Sources at the Customs explained that the reason for this false declaration is that Polyacetals global pricing is US$600/metric tonnes as against US$2,000 Polyol.
Similarly, the company is also accused of declaring a chemical called TDI as Toluene. Global pricing of Toluene is US$600 as against TDI’sUS$2,300.
The consequence of this false declaration according to experts, is duty under-payment and the consequent defrauding of the government of necessary duty and VAT on these transactions.
Aside from the loss of revenue accruing to the government, there is a major security implication for the false declaration of TDI. Apart from a chemical used in the production of polyurethanes, primarily for flexible foam applications including furniture, bedding, and carpet underlay, as well as packaging applications, TDI is also used in the manufacture of coatings, sealants, adhesives, and elastomers.
But due to TDI’s potential explosive properties, the material is a controlled substance that requires an End User Certificate, EUC issued by the office of the National Security Adviser (NSA) for its importation to Nigeria.
Sources close to the company alleged that presently there is no evidence to support that Zhe Long has EUC for its TDI’s importation, which according to security experts, constitute a serious national security breach.
When THISDAY visited the management of Zhe Long Investment Limited, its reception was as that of a mushroom company running a shady business by stark illiterates who cannot engage in simple conversations.
The Chinese factory supervisor, Jennifer Fung, spoke on the defensive without providing substantive evidence. “Who gave you this information? All the information is fake, we report to the revenue office. If anybody says that, let them come to check by themselves. We have immigration and revenue reports. We have a lawyer. Let them go to revenue and immigration offices at Abeokuta to check everything.
Please come, let’s arrange to meet and we can talk face to face,” Fung said.
When quizzed on the reports of her company falsely declaring a chemical known as Polyol as Polyacetals, and THISDAY investigation, which revealed that there are about 30 Chinese semi skilled/manual workers operating in the company without a formal CERPAC
documentation, which is clear breach of the nation’s immigration law by both company and the illegal immigrants, she denied. Frustrated over the line of questioning she vehemently insisted on knowing the sources of the reporter’s investigation, whilst demanding to see the documents, saying, “We know how to do business in Nigeria. How can it be true? This is Nigeria where there is law. We can’t do anything out of the law when we know we’ll get punishment. Why would we do that?
Who has given you fake information? Who wants to destroy us? If you want to know more, talk to my lawyer.’’
Meanwhile, it appears the Chinese malfeasance is receiving global attention. Last December, John Bolton, President Donald Trump’s national security adviser, had accused China of using “bribes, opaque agreements and the strategic use of debt to hold states in Africa captive to Beijing’s wishes and demands”.
Chinese counter reaction has also been blunt: “Nigeria has the most,thieves in the world,” says Thomas Liu, who runs the medicine company,
using the sort of uncompromising language that grates from Accra to Kinshasa. “You have to avoid being tricked.”
Chinese businessmen also claimed they have to negotiate past Nigeria’sbureaucratic gatekeepers for permits and licences. “To visit a government official here, you best have around $6,000 to $10,000 with you,” says Mr. Ban, a miner. “Otherwise, forget about getting an appointment.”
Mckinsey, however, asserts that despite the Chinese presence in Nigeria, the organization said only Ethiopia and South Africa have a high level of engagement.
Despite this umbrage, Jonathan Coker, Nigeria’s former ambassador to Beijing, says western warnings about Chinese investments are hypocritical.
“Diplomats say we will become slaves of China. This is the propaganda of the west,” he says. Instead, he adds, Nigeria has much to learn.
“China is 10 times the size of Nigeria’s population but they have developed a system that can take care of their people. These are the examples we want to adopt.”
Over the years, China’s hidden motives are becoming evident to more African countries. The reason Chinese corporations are in Africa becomes evident: to exploit the people and take their resources. It’s the same thing European colonialists did, they are squeezing Nigeria
and the rest of Africa for everything they are worth. Receiving foreign investment isn’t the only way that a country can industrialized.
For the moment, the Greek-gift investment China is making in Nigeria is serving as a temporary solution by helping increase the economy.
However, Nigerians are being run out of their homes due to vast production of factories. They are being utilised for cheap labour while being exposed to hazardous work conditions and accumulating billions of dollars in debt. Nigeria has become dependent on China for infrastructure, resources and monetary aid even though there goods and services are far inferior. If Chinese presence were to vanish from Nigeria, Nigeria would be left without a way to maintain a sustainable economy for itself.
As the proverb says, “Give a man a fish, and you’ll feed him for a day. Teach a man to fish, and you have fed him for a lifetime.” That implies if you give a man the answer, he will only have a temporary solution.
But if you teach him the principles that led to the answers, he will be able to create his own solutions in the future.
The difference is temporary fix versus continuous growth. Manifesting a moment versus launching a movement. When it comes to China, their presence in Nigeria and across Africa is only temporary.
China is the second-largest economy in the world but its increased involvement in Africa is creating dependency, perpetuating unlawful labour conditions, and encouraging the corrupt nature of our government. As a result, the question then becomes whether China’s increased presence is promoting progression or stagnation throughout
Nigeria and the rest of Africa. Until the Nigerian authorities can break the Chinese racket and evolve, the nation will continue to be held down by their ugly exploitative business model.