Nigeria’s Need for a ‘China Strategy’
By Chukwuemeka Uwanaka
A major socio-economic milestone was achieved recently by China in November 2020, when the country’s South West province of Guizhou announced that its last nine impoverished counties have been lifted out of absolute poverty.
What this means is that all the areas and counties of China are officially out of poverty. This achievement fits into the national aspirations of Nigeria, which is currently the country with some of the highest numbers of poor people in the world.
Similar aspirations in Nigeria and other African countries have been given fillip by official platforms such as the Forum on China-Africa Cooperation (FOCAC), which takes place every three years, and provides a periodic opportunity for high level interaction between all African Union countries (except Eswatini) and China.
Trade between Africa and China has grown from $1 billion in 1980 to $185 billion in 2018, making her Africa’s largest trading partner. The Chinese government pledged $60 billion in aid and loans for the continent at the last FOCAC in 2018.
The complimentary construction of the African Union headquarters in Addis Ababa, Ethiopia, by the Chinese government in 2012 can be described as one of the major indicators of increased collaboration between the continent and China.
The China-Africa Summit on Solidarity Against Covid-19 was established also to strengthen mutual assistance between both partners.
Nigeria and China established formal diplomatic relations on February 10, 1971. Bilateral trade between both countries has risen from $384 million in 1998, to $19.27 billion in 2019. A $2.4 billion currency swap deal, valid for three years, was signed in April 2018 to improve trade relations.
In Nigeria, most Chinese economic activities are visible in loans for infrastructural projects.
They include the $874 million, 187km Abuja-Kaduna rail, the $1.2 billion, 312km Lagos-Ibadan expressway, the $1.1 billion Kano-Kaduna railway lines and the $600 airport terminals in the major cities of Kano, Abuja, Lagos and Port Harcourt. It can therefore be assumed that Nigeria’s approach towards China is infrastructure driven.
While these investments and loans in Nigeria and the continent have been applauded, there are however strong concerns as to the sustainability of bilateral relations between both countries, given the growing level of Nigeria’s financial exposure to China.
Also of concern has been the trade imbalance between both countries, with Nigeria importing ten times more than it exports to China, with Chinese cheaper imports costing Nigeria thousands of jobs in the textile manufacturing industry.
The lack of a clear and readily available ‘China Strategy’ by Africa’s most populous and largest economy, means that Nigerians are not very clear on how Nigeria should engage with the world’s most populous country and second largest economy.
China, in contrast has the ‘Belt and Road Initiative’ (BRI), which is the country’s global development strategy designed to harness the benefits of both international and domestic markets. The country previously had the ‘Reform and Opening-Up’ strategy initiated by Deng Xiaoping, upon assumption of office as Leader of China in 1978.
Nigeria has an estimated population of 200 million and Gross Domestic Product (GDP) of $443 billion, while China consists of 1.4 billion people and GDP of $14.9 trillion. What is most visible is a troubling increase in debt. It therefore becomes essential for an attempt to be made in providing some strategic pathways that the constituent parts of Nigeria can adopt in engaging with China, especially in economic matters.
China is made up of 31 provincial divisions, which can be grouped into 6 regions of North China, Northeast China, East China, South Central China, Southwest China and Northwest China. Each of these 31 provincial divisions and six regions, has what may be described as their areas of comparative advantage, which when taken together, provides the country with its socio-economic strength.
Nigeria in some comparison consists of 36 states and a Federal Capital Territory, which are grouped into 6 geopolitical regions of South-east, North-east, South-west, North-west, South-south and North-central. The 36 Nigerian states and the six regions also have their own peculiarities that come together to make Nigeria what it is.
With these administrative peculiarities in mind, what then will be a strategic approach for Nigeria in its bilateral engagement with China? Attempting a strategic fit between the 6 regions of each country, may be a considered option. This will entail an assessment of the opportunities of each of the provinces and regions of China, to see how each state and region of Nigeria can make the most of such bilateral economic relations.
North China is a region that has cities such as Beijing and the province of Hebei, as its constituting parts. Steel production, as well as maize, millet and wheat are some of the products that thrive in the region.
Beijing, the country’s capital city and home to both government institutions and a thriving real estate market are also worthy of mention. The preponderance of agricultural activities, presence of Ajaokuta Steel Complex and location of the Federal Capital Territory, Abuja in the North-Central geopolitical region of Nigeria, suggests that North-Central Nigeria will be best served strategically with the North China region.
The region of Northeast China has hot weather that enables the high yield growth of certain agricultural products such as millet and maize. Bailey, wheat and soybeans are also grown in the region, which also has farmers that rear large quantities of livestock such as sheep. The Armur River contains large fishing prospects. Nigeria’s North-East, North-West and parts of North-Central geopolitical regions, stand to benefit from well-designed trade strategies with this region. The three geopolitical regions stand to benefit from partnerships that will lead to higher yield of plants such as millet, maize, soybeans and wheat, as well as management of livestock that addresses the conflict patterns between farmers and herders.
The management of the Lake Chad for fishing also comes to mind. The regions’ experience with industrialization is also something that Northern Nigeria can benefit from, especially in agriculture and agro-allied based industrialisation.
East China is the region by the East China Sea. It is known for high marine life productivity, as well as for its contributions to maritime and shipping traffic for the country. The region with its surrounding waters, also accounts for some of China’s oil and natural gas production.
Given this region’s characteristics, the South-South geopolitical region of Nigeria may be the strategic fit for East China. Bilateral relations should therefore be developed by Nigeria Ports Authourity (NPA), Nigerian Maritime Administration and Safety Agency (NIMASA) and Maritime Academy of Nigeria to enhance Nigeria’s fishing and maritime sectors. Such strategic approaches will reduce the incidents of illegal fishing in Nigeria, given that fishing trawlers from the Asian continent are suspected to be principal participants in the illegal fishing on Nigerian waters.
The drive to develop more Seaports through the construction of Ibom Deep Seaport, Azumini Seaport, reactivation of the Eastern Ports and construction of Lekki Deep Sea Port in South-West Nigeria can be achieved from such strategic partnership. This region of China, which also contains the tourist and economic city of Shanghai, can provide partnership benefits for tourism locations such as Calabar- with the TINAPA Resort, Obudu Cattle Ranch and Calabar Free Trade Zone in perspective.
The provinces of Guangdong and Hubei are some of the provinces that make up South Central China. This region is known for its high technology, foreign trade, manufacturing, industry and its resultant transportation hub in the world’s second largest economy.
It is home to megapolises and large cities. By the features of this region, both the South-West and South-East geopolitical regions of Nigeria are positioned to benefit from strategic partnerships with South Central China. Lagos, Aba and Nnewi as technological cities; Onitsha with trade; and Ogun with manufacturing; are some locations in Nigeria that can make do with the required strategic partnership developed with South Central China. The Special Economic Zones such as the Lekki Free Trade Zone and Enyimba Economic City are also well positioned in this regard.
South-west China region contains provinces such as Sichuan and Yunnan, which are some of the more productive agricultural areas of the country. The region is also rich in mineral resources, and is known for textile production and hydropower. The North-Central and North-West regions that constitute the ‘food basket’ of Nigeria, source of hydropower, base for textile production- albeit in decline- and mineral resources, can definitely make do with more precise bilateral relations with Southwest China.
Shaanxi and Gansu are some of the provinces that make up the region of Northwest China. The constituent parts of this region are some of the highest producing, in terms of coal, natural gas and crude oil.
The region is also known for its high technology sectors such as aerospace, auto parts and electronics. Given the role that companies such as Innoson Vehicle Manufacturing Co. Ltd has played in auto manufacturing and provision of aero parts for the Nigerian Air Force, as well as proven coal exploits and deposits in Enugu, the South-East region of Nigeria constitutes a strategic fit for Northwest China. The South East of Nigeria is also rich in natural gas and crude oil.
These approaches can come with its implementation limitations, and the sub-propositions explained, are by no means exhaustive. However, the goals of attaining more value in non-oil sector of Nigeria for increased job creation and socio-economic stability can be best attained through cogent strategic approaches.
The Chinese economic reforms that have lifted over 800 million people out of poverty- an unprecedented feat- began in 1978 under the reforms of Deng Xiaoping. These reforms have made the major economic blocs of the world, export and trade destinations for China. They include the US (17 percent), the European Union (15.9 percent), Hong Kong (15.5 percent), Japan (6.4 percent) and the Republic of Korea (4.3 percent).
With China becoming the second largest economy in the world and officially out of poverty, similar socio-economic status is envisaged for Nigeria.
This proposed ‘China Strategy’ can also be made a part of the Nigeria Economic Diplomacy Initiative (NEDI) of the Ministry of Foreign Affairs, when revised. The concept of Economic Diplomacy as a part of Nigeria’s foreign policy, was successfully made more prominent under the tenure of General Ike Nwachukwu, as Nigeria’s Foreign Affairs Minister in the 1980’s. NEDI, in its current form, does not pay sufficient attention to China, with no explicit position on what strategy documents such as the Belt and Road Initiative means for Nigeria.
In all of these proposed approaches, there are also key roles for trade and investment facilitation agencies mostly under the Federal Ministry of Industry, Trade and Investment (FMITI) in Nigeria.
They include the Nigeria Export Promotion Council (NEPC), Nigeria Investment Promotion Commission (NIPC), National Office for Trade Negotiations (NOTN), Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Nigeria Export Promotion Zones Authority (NEPZA) and Development Bank of Nigeria (DBN). These agencies are expected to provide advisory as well as the enabling environment for relevant Nigerian stakeholders and companies across the geopolitical regions, towards exporting fully processed and semi-processed products.
To enhance successful implementation and given the geopolitical strategy recommended, the development commissions in place, as well as those being proposed for each of the regions in Nigeria, may perhaps have roles to play in making this a success. The North East Development Commission (NEDC), BRACED Commission for South-South and the proposed South East Development Commission, South West Development Commission, North Central Development Commission and other commissions proposed for each region should be encouraged to primarily take up these responsibilities. In the interim, the Governors Forum already in place for each region can take up the responsibilities, with some oversight from the Ministry of Foreign Affairs, FMITI and other relevant federal ministries.
With infrastructure stock at 25 per cent of GDP, which is below the recommended 75 per cent of GDP international benchmark, the need for better infrastructure across all geopolitical regions of Nigeria, for improved economic competitiveness, cannot be faulted. Meeting such infrastructure needs mostly through loans from China is definitely not a sustainable strategy, given Nigeria’s experience with debt management. There are also more fiscally affordable options for infrastructure development. The country current debt profile stands at US$85.9 billion; and a situation where most of the non-debt government revenue being used for debt servicing, does not support more borrowing.
The current one-size-fits-all approach in sourcing loans from China is unlikely to be beneficial in the long term, but bilateral economic relations can be made more strategic and symbiotic, through a geopolitical economic approach for more mutually beneficial relations. Loans collected for infrastructure projects must be amortized by the projects themselves. This approach will also enhance the perception of China as a worthy partner. Given Nigeria’s leadership position in Africa, such an informed approach can galvanize other African countries to follow suit, in developing their individual ‘China Strategy’.
Uwanaka, a policy analyst, writes through email@example.com