Prevailing China-Nigeria Cooperation: Should We Worry?

13/04/2016

President Muhammadu Buhari is in China. A common discussable topic nowadays, the retail-business woman in the market finally looks forward to instant relieve on inflation, uncomforting hike in price of goods and services.

As conceived by her– President Buhari is on a proverbial journey,  to find lasting solution to various problems holding us down as a nation, to fight Pharaoh and her army (enemies of progress) and return home with the long awaited ‘magic rod’ similar to one used by Moses in the bible to path the red sea. We need ours to free Nigeria from shackles of poverty, hardship, unemployment etc. And finally, to lead 112 million Nigerians living below $2 per day, army of unemployed youth, underprivileged, vulnerable Nigerians to the promise land. A land filled with honey. Bread for the hungry… And ‘duty’ for the jobless.

There’s poverty in the land. Life is hard; life is cruel, life is difficult for average Nigerian residing in hinterlands and villages across the country. Minimum wage earners in the cities barely meet their daily needs. The situation is serious.  The mood is not nice.

It is best captured in the video that recently went viral online. A frustrated taxi-driver, in an interview, was on rampage as he poured his heart out without holding back. The cliché that in sorrow or adversity Nigerians are resilient and spirited instantly became a myth. I conclude that hardship has elder brother. 

He thinks there’s no justification for the government to subject its people to the kind of struggle he faces in his quest to buy fuel. He waited all day on cue, all to no avail. He was furious and in the video – He simply wants the country and all that breathe in it to collapse. Not gradually but at once. Unfortunately so, he couldn’t spare ‘you’ and ‘I’ from his dooms-call.

Nevertheless I believe, if in any case it were to happen, nature would be fair to bring together all politicians across the land as shield over the rest of us and ensure they receive most ‘hit’ from the debris.

On PMB’s official trip: I found great delight in Nigeria’s current romance with People’s Republic of China. I must quickly add that development such as this is always foreseeable from a well structured administration; with capable hands and well-read individuals manning key Ministries. One of which is the Ministry of Foreign Affairs, the person of Geoffrey Onyeama. Highly cerebral! …  Also to include that whoever is responsible or found to have advised The C-in-C to look toward the Asian giant for economic ties and within his/her capacity initiated current bilateral cooperation between both nations, I say to the person(s): You’re the hero of this political dispensation.

I say it all the time that amidst today’s global politics, hypocrisy and lip service the two nations to befriend, most importantly developing countries, for economic partnership and security support are China and Russia. The former being the second largest economy in the world can always be targeted for industrialization, trade, funding support for infrastructural development etc.

According to Dr. Keith Jefferies, one of Botswana’s leading economists “the strategic economic cooperation between Africa and China will elevate developing countries and stimulate growth, especially under the auspices of such regional blocs like Southern African Development Community (SADC), and the Economic Community of West African States (ECOWAS)”

“African countries need to glue closely in order to benefit widely from economic deals with China”

Something is ‘brewing’ in Beijing. Landmark deals and agreements are being signed by Nigerian officials led by President Buhari and Chinese counterparts. On the other hand, this move has received its backlash. Though, we have people in some quarters that -with pessimism- outrightly condemn what they termed “razzmatazz”.

However, there are few concerns emanating from notable Nigerians. The issues border on, ulterior motive, corruption, debt profile. These concerns are not totally out of place and I think they’re for benefit of doubts worth exploring.

Yes it is true that China is looking expend in ‘loan and kind’ $60 billion in Africa.

“… China will offer 60 billion U.S dollars of funding support, including 5 billion dollars of free aid and interest-free loans, 35 billion dollars of preferential loans and export credit on more favourable terms, 5 billion dollars of additional capital for the China-Africa Development Fund and the Special Loan for the Development of African SMEs each, and China-Africa production capacity cooperation fund with the initial capital of 10 billion dollars.”

As regards ulterior motive –Such comment as “Oga China is mainly out to protect its interest in Africa” in reality may not be wrong.

Also, they infer that such currency agreement signed by Nigeria’s Apex Bank and ICBC (Industrial and Commercial Bank of China) which will, as agreed in the deal, see Nigeria as the clearinghouse of renminbi(Yuan) in Africa – to them is a grand move to revitalize China’s export market in Africa, which is under pressure from falling oil prices.

In Nigeria alone, it is reported that 70% of our total imports come from China. And recently, due to depleting reserve, the Central Bank of Nigeria placed 42 items on “forex restriction” list.

The currency deal, which now allows Nigerians who import from China to transact in renminbi(Yuan), would admittedly address forex impediments. However this development, according to concerned Nigerians, would further edge importation over local production. For a country that wants to #buynaijatogrowthenaira.

On the other hand, I think more emphasis should, instead, be placed on 10 major projects offered by China “particular noteworthy is the emphasis on industrialization and the concept of exporting ‘production capacity’ from China as a way of promoting African industrialization.”

Oh, this is a plot to keep construction companies from China preoccupied in Africa with attendant effect on taxation/tax income to grace Beijing’s purse. By the way, I didn’t imply that. These are words coming from the street.

In all –China is not saying oh we’re Messiah or Good Samaritan we just want to help. President Xi Jinping, in his own words, calls this “time-honored win-win partnership”.

In my opinion I think the odds favour Nigeria and indeed the whole of Africa.

On corruption

The argument that monies borrowed from Beijing if not checked and properly monitored could be just another ‘freebies’ for political hawks and looters who over the years have fed fat on our common resource. For me this argument is valid.

However, in addition to the fact that we have at the helm of affairs a President who is ready to fight corruption to standstill; but greatly structured though –is the idea that counterpart funding from China on projects (railway, roads, power etc) proposed by Nigerian government would, upon commencement, be remitted directly to Chinese Companies in-charge-of various projects. In my opinion, this would go a long way in addressing –to a large extent –all corruption-related concerns by eliminating ‘middleman syndrome’ which usually in our clime creates avenue for exploitation and profiteering.

Incurring more loans is just unnecessary; we should be concerned about growing financial liabilities & commitments and as a country should focus more on clearing our indebtedness both local & foreign, instead of over-bloating our dept profile. This is true. .. But it is also true that the crash in the price of crude oil has dealt a serious blow to our economy. Nigeria’s mono product economy is struggling and some experts believe that way-out at this point is to jumpstart the economy through diversification –by investing heavily in infrastructure, agriculture, mining, real sector (SMEs), human capital etc.

“High debt to GDP doesn’t necessarily mean the economy is under performing. For an economy to grow, same needs to be funded by taxes, debt etc. There are limitations on raising taxes. The government may resort to debt. Most of the economies are run with deficit budgets. But a stagnant economy often displays the higher debt/gdp ratio” – Quora

Nigeria boasts sub-Saharan Africa’s lowest debt-to-GDP ratio [Bloomberg Business]

So –Prevailing China-Nigeria cooperation: Should we worry? No. There’s no cause for alarm!

Boluwatife Adekunle

@boluzzz