Why is China so interested in Nigeria?
Nigeria is a developing country in West Africa. It is adjudged to be the biggest economy in Africa. This makes her the darling of every business minded concerns and nations. Over 70% of exports by Nigeria include oil and petroleum, making this sector the backbone of its economy. The Government has also made conscientious effort in developing other sectors of the economy as export income earners. These are facts but why is Nigeria suddenly becoming China’s newest bride?
China’s Policy towards Nigeria
China has changed its outlook on the global economy in the last twenty years. China has deepened trade policies with developing countries in Asia and Africa under its “Going Out” policy. In the past decade, China has invested heavily in Nigeria’s roads, railways, airports and power installations. Nigeria is one of China’s closest trade partner, as Nigeria is an important exporter of oil and petroleum raw materials for China’s fast-growing economy.
China’s economy is highly dependent on its manufacturing business, which is dependent on oil and natural gas. Since 2006 Chinese companies have been privileged to be awarded oil prospecting and mining licenses in Nigeria. When the oil prices went down in the international market, China extended financial help to Nigeria to revive its economy.
Infrastructure and Diversification
China has tried to diversify its business with Nigeria and go beyond oil. The major obstacle in this effort has been Nigeria’s poor transport, power, and water infrastructure. Chinese suppliers involved in the service and maintenance sector have also been benefiting from the improvement in technology infrastructure and increasing telecoms customer base. China has to look forward to Nigeria not only as an exporter but also as a major market for its products. Nigeria exports nearly 60% of its natural resources to China. On the other hand, China exports about 2.5% of its manufactured goods to Nigeria.
Nigeria as a Manufacturing Hub
In recent years Chinese businessmen have moved from import/exports trade to manufacturing within Nigeria itself. This cuts down the costs of transportation and distribution. Manufacturing costs in Nigeria are much cheaper than in China. But many times, Chinese businessmen have shied away from setting up factories because of logistic issues like power, transportation, etc. Lagos and Ogun States are major operating hubs for the Chinese and both have areas designated as free trade zones between Nigeria and China. Since the emergence of these zones, there have been massive development projects directly undertaken by Chinese firms.
As the Nigerian economy booms, the purchasing power of her citizens also rises making it a suitable market for many Chinese products like phones, computer technology, household goods, cultural items, etc. Nigeria is the most populous nation on the African continent. The middle class of Nigeria is also expanding, making it an ideal consumer base for Chinese everyday products.
By doing all these, China has also generated employment opportunities for its own citizens. Many Chinese nationals have been moving to Nigeria for the expansion of their businesses and some are even researching into other productive sectors such as agriculture and mining.
Apart from the major key infrastructure projects, more and more Chinese businesses are setting up like the ceramic industry, farming, and other service-based industries like restaurants. Chinese companies have also introduced services like digital TV, telephone for Nigerian cities. As business opportunities with China increase, the Nigerian public is aiming to learn about China’s culture and economic growth. There have been talks about introducing Mandarin lessons at primary and middle school levels in Nigerian classrooms.
The next few years will see more interactions between both countries and as the world order is changing, we expect Nigeria to play new roles in the scheme of things.