China’s Exploitation Of Nigerian Market Is Questionable

Last week the Charge d’Affairs of 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. This represented 7.6 percent of the total trade volume between China and Africa and 36.4 percent of total trade volume between China and ECOWAS.

China’s exploitation of the Nigerian market is of questionable benefit to Nigeria. China has been embraced with large arms by Nigeria and has continued to expand its trade relations in the country.

It’s unfortunate that the full details of this analysis in the ratio of imports to exports were not stated. However, it was revealed that in 2015, Nigeria spent about N1.57 trillion to import goods from China as compared to a measly N157.5 billion from in exports from China, showing that Nigeria imported ten times more than their exports to China. It’s estimated that in 2016 so far, Nigeria has spent about N839 billion on imports from China and earned just N82.3 billion from exports.

China has adequately benefitted from the balance of trade between both countries, where import from China between 2013 and 2015 was 7.8 times more than Nigeria’s export. China is one of the few trading partners that Nigeria still operates a trade deficit with, as 22 percent of Nigeria’s imports between 2012 and 2015 were from China, while only 1.5 percent of exports went to China. This imbalance, however, is never mentioned by the Chinese Embassy who have immensely benefitted from imports brought into Nigeria.

Earlier this year, the Industrial and Commercial Bank of China Ltd (ICBC) and Nigeria’s Central Bank allegedly agreed on a currency swap deal. The purpose of the deal was to address short-term foreign currency liquidity challenges and ease the pressure on the dollar as China’s trade relations with Nigeria was on the rise. China is Nigeria’s largest trade partner in imports. The currency swap deal has its downsides as it could potentially weaken Nigeria’s domestic production as the country would then rely on China’s imports since importers would have easy access to the Chinese Yuan to bring in cheap goods rather than produce within the country. The government has however denied the swap deal.

Nigeria needs to improve its domestic trade capacity to possess a favourable trade position with China. Creating partnerships with the Chinese should be to increase manufacturing capacity of goods Nigeria can produce themselves rather than Nigeria depending on import from China. A conscious deficit gap closing should be seen if Nigeria continues to progress in its industrialisation agenda. Nigeria’s sole focus should be on creating a sustainable model to ensure local economic development and growth.

Nigeria’s unfavourable trade with China has led to the collapse of industries like the textile industry. China has been associated with the importation of several substandard items into Nigeria with the Federal Government doing little or nothing to stop this. Earlier this year, the National Agency for Food and Drug Administration and Control (NAFDAC) reported that 91 percent of tomato pastes imported into Nigeria are substandard with most of these imports arising from China and India. China has been a major beneficiary of the slump in the oil prices with Nigeria being an exporter of crude oil to China.

In August, Bloombergreported China’s illicit trade of Rosewood which is currently estimated to be worth at least $1.3 billion. Nigeria is China’s biggest supplier of this wood in Africa. China’s illegal harvest of Rosewood from West Africa has led to the destruction of forests within the region.

Staff relations remains an area that the Nigerian government has failed to handle properly. Scores of Nigerian workers haveaccused Chinese employers of maltreating their staff and poorly compensating them. It’s also uncommon to see Nigerians within the leadership structure of Chinese companies based in Nigeria. “What is the economic sense if the deal allows Chinese to take 100 jobs out of 110 jobs, leaving only 10 for Nigerians?”said Nigerian Industrialist, Mazi Sam Ohuabunwa.

Most Chinese companies rather bring their citizens into Nigeria without transferring any major technical skills to Nigerians. This is as a result of lack of law creation and enforcement regulating labour relations within the country.

The mentality that China’s current relation with Nigeria is a favourable one needs to be changed. Rather, Nigeria must seek to accept only partnerships that would benefit the country rather than hurt us. “A review of the exploitative elements in this marital contract is long overdue. Every romance begins with partners blind to each other’s flaws before the scales fall away and we see the partner, warts and all. We may remain together – but at least there are no illusions”,said Sanusi Lamido’s Sanusi, former Governor, Central Bank of Nigeria and Emir of Kano.