By IKENNA EMEWU, ACE Online
To explore more information and knowledge about trade and economy between Nigeria and China, AFRICA CHINA ECONOMY ONLINE interviewed an informed Nigerian on the benefits and prospects of a better trade relations between Nigeria and China and we spoke with Nigerian engineer and businessman, Washington Uba who explored the strong points of China’s economic relationship with the world and Nigeria and suggested ways to make the benefits better.
Benefits of trade between Nigeria and China
The benefits in trade between Nigeria and China are so huge, diverse and to the economic good of the two sides. I have always argued that trade between China and any country can never be one-sided because of the diverse nature and range of Chinese goods of trade.
Regarding balance, there is no way two trading countries must be equal, so it must be in favour of China for obvious reasons of having a better, bigger and broader economy with a high depth and volume of production that is the largest in the world of course. I rather look at the possibilities and gains of one leveraging on the other for growth.
Let’s take for instance that China has a bigger balance of trade against Nigeria and Nigeria in turn as an example sells the goods it produces from machinery it bought from China to other countries and gets a favourable balance of trade against such other countries, it has therefore made her profits from the larger volume of production of finished goods she trades with other countries other than China and through that reaps bigger and deeper production, she would have deepened expertise in such production. That way, Nigeria has gained from her unfavourable trade with China that has favoured her trade with others.
We have good examples of what trade with China can bring as benefits which is noticeable in other African countries like Ethiopia, Kenya, Morocco and South Africa and Nigeria needs to be serious and reap the same benefits. That is actualizable through concentration on industrial machine trade and imports. When I think of these growths in the countries that trade with China I see that huge economy as the best and kindest to smaller economies comparatively. It shows China’s trade is open and in tandem with the WTO rules. I dare say that China does its business in most open manner because they understand the benefits of integration with other economies to sustain theirs.
My position is that in trade and economic relations, China does not build walls. They build bridges that form links and beneficial interconnectivity and win win. They don’t work or relate to take everything to themselves and leave the partner wallowing in loss.
The challenge is mainly on the side of Nigeria. We have a duty to firm up our bargain grounds. It’s not the duty of China to do it for us. In business, you make your environment profitable and nobody else does it for us. We should be up and doing. In our country, yes there is security challenge but that is internal and not enough to stop us reaping the benefits with China if we want to. It is just a little part of the country that is not known for business from time that has the challenge and the rest of the country is peaceful for trade and other businesses with China and the world.
Our challenge is that we should firm up our power system that drives virtually every sector of the economy. I give you an instance, the Chinese investors here have been making a great harvest of timber production and export to China because it does not require so much electricity to handle. They are rugged and strong people that go into the forests in hinterland Nigeria to procure the timber and send to their country.
On a general scale, the challenge trade between the two sides faces is trust and getting to know each other better. It also involves China firming up her control and standards regulating system to reduce the quantity of inferior quality products from China that gets to Nigeria. There is this stereotype that has built over time that Chinese products here are inferior and don’t have value for the money. But the same China makes also good quality products and send to other worlds and economies like Europe, Asia and the US, and even Nigeria. That shows that some elements within China make the inferior goods in liaison with other like minds in Nigeria and with the assumption that all African or Nigerian markets and consumers are poor. That is not correct because the EU, America, Japan, South Korea and the rest bring top quality goods to Nigeria and still sell them. We know what good quality product is and know the difference between the inferior and superior. A good example is that electric cables made in Nigeria are better in quality than any imported ones from any country, including China. So China has to work on that challenge and with time and links created, China and Nigeria would get to know each other better and relate more profitably.
I would advise also that our businesspeople should de-emphasise just going to China to import finished goods and dumping on Nigeria. I recall that President Xi Jinping of China promised that after this year’s FOCAC summit, China would focus more on importing, not just raw materials but finished goods from Africa as a way of encouraging industrial growth of the continent. That is a great step if implemented and Nigeria should take advantage of that as the largest economy and market in Africa.
Policy enhancement and other incentives
We need to enhance first our relationship with each other at the person-to-person level. People relate better when they are friends and when they know each other more. So Nigeria and China should build more linkages in education, culture, friendship, human resource enhancement etc. Let China not fixate on making or allowing Nigerians remain menial and unskilled partners at work places. It is proven that skilled and knowledgeable people are easier to handle. We should deliberately vitiate biases and looking down on each other.
Again, on the side of incentives, Nigeria and China have done well this year to encourage trade between them through the currency swap policy that came into effect in April. It’s a great step forward because that bye-passes the hitches of trading through intermediary currencies like the dollar, euro etc. Since the coming into force of the deal that started with just $2.5b, we know there have been boosts as the Nigerian central bank now release the US dollars and Chinese yuan into the foreign exchange market at every trading season, and because about 45% of Nigerians that buy forex for trading are those that trade with China, this has eased the tension on the value and exchange rate of the naira over the dollar. But we have to strengthen the policy because now it is somehow just elitist. The use has to trickle down to the street where people can easily buy the yuan for their needs as they buy the dollar and euro and pounds sterling. We hope it gets there fast.
I am sure China is tenaciously pursuing further opening up, reason it commenced another currency deal with Japan, a neighbouring and big economy at the end of October.
We look forward to policies that encourage manpower enhancement in the technologies of today’s trade such the ICT. And China has been doing well in the ICT, from chips to gadgets, and most of which is consumed in Nigeria. For instance, the switches, ICT hardware and backbone that power the Nigerian ICT and infotech sector are from China and dominated by the Huawei giant. We need to have China locate factories that make gadgets in Nigeria to a certain percentage; say for instance that we get into a policy pact that 35% of Chinese gadgets consumed in Nigeria must be locally made. And because China has exceeded its export quota with the WTO in so many products, there is no loss in siting these factories here to make mobile gadgets where 80% of the phone and laptops brands consumed in Nigeria are made in China. We also have budding talents in these sectors who can imbibe better expertise and support Chinese production in Nigeria.
China has also become another world giant in automobile production to a point of overcapacity locally. Right now, most Nigeria automobile users rely on imported fairly used ones, so China can site its automobile plants in Nigeria and use it to cover most of the African markets and save cost.
Nigeria knows these benefits and that is why the federal ministry of trade and industry sent delegation of policymakers and Nigerian businesspeople to the first Chinese import expo in Shanghai early November.
There is every need for Nigeria not to forget the reality that trade with China should be a win-win deal and we therefore at our local level should enhance and make reliable our leadership together with corporate and policy governance in order to favourably compete. We need these things gotten right to move on profitably. Nigeria should first make economic policies enabling and a major target to drive the nation’s growth and make also trade with China and indeed all nation’s worth the while.
It is only when the sides and countries are strong that trades between them would be most beneficial and that rules out antagonism and a party feeling used and victimized because such hasn’t much to offer or put on the table to trade with.
I keep saying, though not assuming that China are angels, that the onus is on us because if China were bad business and trade partners, she would not be trading successfully with the EU countries, Asia and the Americas. The China-Eurasia–Europe train track recently celebrated its 100,000th trip from Chengdu in Sichuan Province through 16 countries that terminates at Lolz, Poland. The trips are just about taking Chinese goods from China to these countries and bringing in theirs to China in the return journey. We need to do the same and find means of encouraging China to assist in funding a rail track to link all ECOWAS countries and other regions of Africa just like they did between Mombasa and Tanzania and between Addis Ababa and Djibouti at the Horn of Africa.
I know that countries like Ethiopia have found more benefit and taken higher their economy by trading more and linking better with China in trade and local industrialization.
Financing trade and investment with China is not what I see as a major challenge. Yes, we need finance to do business but trust breeds and favours financing. When a partner in business hasn’t finance but has trust and integrity, the other party that has the finance can stake some of it being sure that the finance is secure. That boils down to trust again among the sides like I said earlier. It is closer relationship that breeds trust, and so, while the two governments draft policies at such bilateral levels, they should not forget the need to create enablers to foster closer ties between individuals so they can trust each other enough to encourage investments.
We have millions of very industrious and creative Nigerians who also can be trusted and sincere. It is the same with China notwithstanding the negative media feeds we swallow everyday, and we can never find these good personalities until we interact. So I advocate better interpersonal interactions and the need for the two sides to regularly and periodically host conferences, fora and summits on investment to enable businesspeople from Nigeria and China meet and relate.
A good instance is your media organization, the Africa China Economy Online that did not exist until after your founder had attended an exchange fellowship in China and through that created links and friendships that makes China trust and interact with him the more. I am sure the media is making so much impact to unite the economic and trade potentials of Nigeria and China and providing some of us the channels to talk to the world about these things.