Nigeria-China Trade: How the Trade Imbalance is Affecting Nigerians
The trade relationship between Nigeria and China has been making headlines lately, and it’s not all good news. China’s exports to Nigeria have hit a whopping $22.3 billion, while Nigeria’s imports from China are at $1.6 billion in 2022. This trade volume is massively in favour of China, and it’s causing some serious problems for Nigeria.
Experts are sounding the alarm, saying that Nigeria is becoming too economically dependent on China. The trade imbalance has led to the closure of many factories in Nigeria, turning the country into a dumping ground for cheap and substandard goods. In fact, China has over 90% of the total trade volume between the two countries.
In the first nine months of 2023, the bilateral trade volume between Nigeria and China reached $17.25 billion. This makes Nigeria China’s second-largest trade partner in Africa, with China being Nigeria’s largest global source of imports. The Consul General of China in Lagos, Yan Yuging, highlighted that China’s exports to Nigeria amounted to $22.3 billion, while imports from Nigeria totalled $1.6 billion.
China’s commercial interests in Nigeria are significant, especially in infrastructure development. More than 20 Chinese companies are involved in major projects in Nigeria, including railways, roads, electricity, ICT, and oil refineries. These investments have exceeded $1 billion and have contributed to local economic and social development.
However, the influx of cheap Chinese goods has taken a toll on Nigeria’s industries. Mansur Ahmed, President of the Manufacturers Association of Nigeria, pointed out that China’s cheap and sometimes substandard exports have devastated Nigeria’s textile industry. The textile industry, which was once thriving, has suffered greatly due to the competition from Chinese products.
Former President Olusegun Obasanjo has urged the Nigerian government to ban the importation of Chinese adire (traditional fabric) to protect the local market. He expressed concern that the influx of Chinese adire is threatening the age-old tradition of locally made adire.
To address this issue, the Federal Government has expressed its readiness to subsidise the production of indigenous adire fabrics and end the influx of adulterated Chinese adire in the Nigerian market. The Minister for Humanitarian Affairs and Poverty Alleviation, Dr. Betta Edu, visited Adire International Markets in Abeokuta and assured market women of the government’s support to boost local production.
The collapse of Nigeria’s textile industry is not the only consequence of the trade imbalance. The manufacturing industry, which currently operates at about 50% of its capacity, could generate millions of jobs if it were allowed to operate at over 70% capacity. However, many firms have relocated from Nigeria to other countries due to challenges such as high production costs and tight regulations.
China’s involvement in Nigeria’s infrastructure projects is also raising concerns about economic colonialism. The Chinese Belt and Road Initiative (BRI) has led Nigeria to borrow billions of dollars from China for infrastructure projects. While these projects have brought development, there are worries about the increasing indebtedness to China and the terms of the loans.
The Chinese loans, which offer low-interest rates and long tenor, have funded various projects in Nigeria. However, the strict terms and lack of transparency have raised questions about the sustainability of servicing the debt. There are concerns that the Chinese loans may lead to economic dependency and compromise Nigeria’s sovereignty.
Moreover, the influx of Chinese workers and companies in Nigeria has sparked controversies, including allegations of illegal mining activities. The arrest of 13 Chinese nationals for illegal mining activities in Kwara State raised questions about the role of Chinese companies in Nigeria’s mining sector.
While some lawmakers defend the Chinese companies, stating that they have contributed to the growth of the mining industry, there are concerns about the impact of Chinese involvement on local communities and the economy.
The Nigeria-China trade relationship is complex, with both positive and negative implications. As Nigeria continues to engage with China, it must carefully consider the long-term effects of this relationship and ensure that it protects its economic interests and sovereignty.