Nigeria-China Bilateral Trade: variance and Nigeria-China Economic and Business Forum in-view

The president of Nigeria, Muhammadu Buhari and The president of China Xi Jinping

Globalization is the process through which goods and services, capital, people, information and ideas flow across borders and lead to greater integration of economies and societies. In its quest to be part of globalization, China and Nigeria established diplomatic relations on February 10th, 1971. The internal crises faced by both countries reduced the pace of economic integration. Thereafter, China was transforming into an economic power, while Nigeria, in the 1980s and 1990s were marked by a series of military coups, which has impaired trade and economic development.

In 1994, The Nigerian-Chinese Chamber of Commerce was founded. It was not until the return of democratic rule in Nigeria that economic relations began to develop in earnest. The former President of Nigeria, Mr. Olusegun Obasanjo’s election in 1999 coincided with the start of a new Chinese orientation toward Africa in 2000. During Obasanjo’s second term in office (2003-2007), both China’s President Hu Jintao and Prime Minister Wen Jiabao visited Nigeria, and Obasanjo made two official visits to Beijing. Various other ministerial-level visits conducted during this time allowed the two countries to develop and intensify mutual friendship and familiarity. In 2001, the two countries signed agreements on the establishment of a Nigeria Trade Office in China and a China Investment Development and Trade Promotion Centre in Nigeria. The intergovernmental Nigeria-China Investment Forum was then founded in 2006.

Bilateral trade has grown exponentially since China and Nigeria signed an agreement on trade and investment promotion and protection in 2001. The value of trade reached USD 17.7 billion in 2010, almost 10 times its level just ten years before, while Nigerian exports to China more than doubled, they have not kept pace with the growth of Chinese exports to Nigeria. Thus, a heavy trade imbalance has not only persisted but also intensified. Chinese exports represented 66.7% of the bilateral trade total in 2000 and 87.3% of the total in 2010. By 2010, Nigeria had become China’s fourth biggest Africa trading partner, and the second largest Chinese export destination on the continent. Trade between the two countries accounted for nearly one third of the trade between China and the whole of West Africa, indicating the importance of Nigeria to China’s entry into the regional market. Despite recent expansion, China still only accounts for a small fraction of Nigeria’s global trade, lagging far behind the country’s top partner (the United States) and notably facing competition from Brazil and India, as well as more traditional partners such as France. Around 87%of Nigeria’s exports to China are oil and gas products. China, by contrast, exports a diversified range of goods to Nigeria, most notably machinery, equipment and manufactured commodities. While the official numbers are impressive, they fail to capture the complete picture of trade between china and Nigeria.

Nigeria-China Bilateral Trade

The trade between Nigeria and China has largely followed a classical pattern of trade disequilibrium between the developing and the developed economies. The structure of trade between Nigeria and China reflects the difference in the level of development of the two partners as well as high degree of complementary that exist between their economies. While Nigeria’s exports to China consist mainly of primary commodities, its imports from that country are made largely of industrial goods. Within this commodity groups, there have been some important changes in the structure of trade over the years. From analysis, despite the increase in trade volume between the two countries, the bilateral trade relations have been in favor of China, thus creating a feeling of the lopsided distribution of the benefit from the bilateral trade.

The imbalance in trade relations can be address to ensure that the relations lead to mutual beneficial outcomes for both countries. Although trade remains the most important element in Nigeria’s trade relations with China, it has not been complemented significantly by the flows of investment and aid between the two countries. The consequence of intensive asymmetric bilateral interaction to the achievement of Nigeria’s broader national goal should be given serious thought by the Nigerian policy makers and the public alike as such relationship could be jeopardized if one-sided trade relations continue. A continuation of this pattern of lopsided relationship might have serious repercussions for Nigeria. The intensification of dependent relationship can provide an enormous advantage to China in continuation of its economic and industrial expansion.

The expansion of Nigeria’s bilateral trade interactions with China is constrained by a number of factors. These include the imbalance in the structure of level of their trade, the inadequacy of the industrial infrastructure for promotion of relations, the incidence of flooding of the Nigerian market with substandard goods from China, inability to implement various bilateral agreements between the two countries and most significantly, corruption. Corruption is a dreadful phenomenon, which destroys the fabric of all governmental structures in a nation. It is a canker worm which should be abhorred by any nation that want progress and development. Corruption has been with societies throughout history. However, in Nigeria, the insatiable appetite for corruption has become an endemic disease, which has brought concomitant sufferings, untold economic dilapidation, unrest, poverty and lack of infrastructural facilities and underdevelopment to the people so much that the dividends of democracy are not earned and the country’s economic objectives have become an illusion. Corruption in Nigeria has been traced to colonialism, arguing that colonialism in Nigeria was built on corruption. The corruption has weakened all democratic processes in local, state and federal levels of government in Nigeria. It has dampened morality, weakened meritocracy and produced an avalanche of misrule, selfishness, ineffectiveness, colossal misappropriations of funds and unwillingness of those who were elected into governmental power to quit their offices as at when due.

 However, despite this challenges, the bilateral relationship should be symbiotic and mutually beneficial to both countries. Therefore, it must be emphasized that Nigeria’s bilateral policy towards China has undergone a number of shifts of emphasis and reappraisal of priorities. Nigeria-China relations should, however, go beyond rhetoric’s. The possibilities and potentials of a bilateral cooperation between the two countries have not been fully exploited. Nigeria and, indeed, Africa should move beyond the bounds of marginality and peripheral association where we are looked upon as marginal factors merely for tilting matters in favor of developed market economies. Nigeria abounds with immeasurable reservoir of opportunities for trade, investments, business, and cooperation. The indifferent response to invitations of Chinese investors to come and invest in the country has not been encouraging, as one would have expected.

Trade Nigeria Organization

Trade Nigeria, a wholly indigenous organization that is duly incorporated in Nigeria, a public private partnership project with the government of Nigeria on international trade, foreign direct investment, business development, trade promotion, economic exchange and multilateral cooperation with main focus on economy growth and development. In collaboration with the Federal Government of Nigeria through its agencies, Trade Nigeria is instituting a Nigeria-China Economic and Business Forum, which is part of the Organization’s annual joint trade mission. this year's trade mission is unequivocally tagged “Nigeria-Asia”. 

 

The Nigeria-China Economic and Business Forum will promote, expand and diversify Nigeria’s export base by making the non-exports contribute significantly to the nation’s gross domestic product (GDP)  and it should be aided under the current bilateral agreement of both countries for mutually beneficial, sustainable economic development and balance of trade.

Trade Nigeria will be using the platform to evolve a cooperative mechanism that would enable Nigeria increase its export of manufactured goods to China. This will to a large extend reorient the  Chinese companies in Nigeria to diversify their economic activities, rather than restricting themselves to merely importing finished goods from China for sale in Nigeria; they should invest in the productive sectors of the Nigerian economy and thereby gain from the export of such Nigerian-made goods. It is true that Nigeria has created an enabling environment for investors, but beyond this, Trade Nigeria is encouraging the development of trade on a wider scale that will eventually leads to industrialization and more investments.

For Inquiry on the Nigeria-China Economic and Business Forum, kindly visit our website ; www.tradenigeria.org

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