China-Africa Trade Cooperation: Gain or Loss?
In this report, Ugo Aliogo examines the recent Beijing Summit of the Forum on China-Africa Cooperation (FOCAC) with special focus on Nigeria
The Beijing Summit of the Forum on ChinaAfrica Cooperation (FOCAC) was recently held in Beijing, China from September 3 to 4, 2018. Chinese President Xi Jinping, Nigerian President Muhammadu Buhari and 49 Heads of State and Government, the Chairperson of the African Union (AU) Commission and more than 240 ministerial level officials from 53 African members of FOCAC participated in the Summit, as they jointly drew the blueprint for future cooperation between China and African countries.
The summit issued the Beijing Declaration tagged “Toward an Even Stronger China-Africa Community with a Shared Future”, and also adopted the creation of a forum known as “China-Africa Cooperation Beijing Action Plan (2019-2021)”.
The summit was particularly aimed at building a closer China-African community with a shared future in the new era. Chinese President Xi Jinping, on the occasion, announced that the country would, on the basis of the 10 cooperation plans already adopted, launch eight major initiatives in close collaboration with African countries in the next three years and beyond.
The eight initiatives are: Industrial promotion, infrastructure connectivity, trade facilitation, green development, capacity building, health care, people-to-people, peace, and security.
Under the eight initiatives, many measures are designed to help the African youths. For example, in capacity building initiative, China would set up 10 Luban workshops to provide vocational training. The details are: a ChinaAfrica innovation cooperation centre aimed at promoting youth innovation and entrepreneurship would be set up; a tailor-made programme would be carried out to train 1000 high-caliber Africans; 50,000 government scholarships will be offered; there will be 50,000 training opportunities for seminars and workshops; as well as 2000 exchange-programme opportunities for African youths.
To make sure these eight initiatives are implemented, China will extend 60 billion US dollars financing to Africa in different forms, which include 15 billion US dollars grants, interest-free loans and concessional loans; and China will encourage Chinese companies to invest more than 10 billion US dollars in Africa in the coming three years. Nigeria-China Trade The China Commercial Consular to Nigeria, Mr. Hongliang Gao, has put the present value of trade between Nigeria and China at $7.2 billion, making China the third largest trading partner with Nigeria.
However, with the increased interest in investments and trade between both countries, the value is expected to surpass Nigeria’s trade with India, which is presently the country’s highest trading partner. Gao said the Chinese government was committed to a sustainable and mutually beneficial relationship with Nigeria.
He explained that Nigeria is Africa’s ‘first population’ country and the largest economy, adding that it is rich in natural resources, fertile lands and huge market potentials.
He further stated that in recent years, the friendship between China and Nigeria had been further strengthened, and that high-level exchanges had become frequent, thus deepening political mutual trust. He also stressed that this chummy relationship has bolstered bilateral, trade cooperation between the two countries.
According to him, “From January to June this year, the bilateral trade volume between China and Nigeria reached $7.2 billion. It increased by 7. 6 per cent year-on-year.
“At present, Nigeria is China’s third largest trading partner in Africa; the largest engineering contracting market, and an important investment destination.
“The continuous and in-depth development of China-Nigeria trade relations is in the common interest of the two peoples.
“Chinese President Xi Jinping shared the friendship and discussed the plans with the leaders of African countries. “The Beijing Summit of the China-Africa Cooperation Forum is a major event in the historical development of China-Africa relations.
“It has established as an historical monument, the China-Africa friendly exchanges; played a strong voice of China-Africa economic and trade cooperation, and pointed out the development direction of China –Africa relations,” Gao stressed.
Meanwhile, as part of the FOCAC summit, Nigeria and China recently signed $328 million agreement for Information and Communication Technology Infrastructure Backbone Phase II (NICTIB II) project.
This came as Nigeria’s President Buhari also sought the support of Chinese President Xi Jinping, for the building of 3050 Megawatts Mambila hydroelectric power project in Taraba State.
In the same vein, it was also learnt that a Chinese firm announced its decision to invest $200 million in an industrial park in Kano State, cotton farms in Funtua, Katsina State, and textile and garment manufacturing establishments in Aba, Abia and Lagos States respectively.
However, the Senior Special Assistant to the President on Media and Publicity, Malam Garba Shehu, in a statement, said the $328million concessional loan agreement between Galaxy Backbone Limited and Huawei Technologies Limited (HUAWEI) was signed by Nigeria’s former Minister of Finance, Mrs. Kemi Adesoun, and Wang Xiaotoa, Director-General of International Development Agency, and witnessed by Buhari and Jinping.
He said Nigeria and China also signed a memorandum of understanding for One Belt One Road Initiative (OBOR).
Shehu, in the statement, noted that Nigeria’s Minister of Foreign Affairs, Geoffrey Onyeama, and Director, China’s National Development and Reform Commission, He Lifeng, signed OBOR, which he described as an initiative of Jinping. The OBOR focuses on improving connectivity and cooperation among multiple countries spread across the continents of Asia, Africa and Europe.
Shehu said during his meeting with Jinping, Buhari commended the Chinese government for successfully hosting FOCAC and solicited its support for Mambila hydropower project.
Shehu disclosed further that Buhari noted that Mambilla project remained a priority to Nigeria and also sought additional Chinese funding for four airport-terminal projects, as well as the Abuja lightrail project.
He also said the president lauded China for accepting to support the international efforts to recharge the Lake Chad Basin, stating, “The inclusion of this project in the FOCAC Action Plan 2019 to 2021 will go a long way in supporting our efforts to rehabilitate and resettle people of the conflict-impacted North-East region.”
The statement also said Buhari noted that easy movement of citizens of both Nigeria and China would complement the currency swap agreements recently signed by the Central Banks of both countries.
The statement added: “Since our last meeting, two years ago, Nigeria has relaxed its visa requirements to Chinese citizens. Today, I am pleased to inform Your Excellency that Chinese citizens receive Nigerian visas in less than 48 hours.
“Another measure that will improve our trade volumes will be to introduce import duty waivers on Nigeria’s commodity exports to China. Today, our commodities such as sesame seeds, hibiscus and cassava, among others, attract import duty in China.” What the Experts Say In his reaction to the FOCAC summit and the Nigeria and China $328 million agreement for Information and Communication Technology Infrastructure Backbone Phase II (NICTIB II) project, the Former Director-General, Nigerian Association of Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA) Dr. John Isemede, said in signing any international trade agreement, Africans, especially Nigerians, should ensure that they build capacity in every area of interest.
He also urged the federal government to ensure that they give targets to all government agencies, Universities, Ministries and Departments (MDs) and the Organised Private Sector (OPS) to meet, in key areas of interest.
Isemede, who is also an international trade expert, advised government to give out public agencies and ministries to universities and research institutes to manage, in order to prove critical solutions to certain challenges facing the country, and also, provide roadmaps for government policies through research and data analyses.
The Consultant to Food and Agriculture Organisation (FAO) said ambassadors in Diaspora should endeavour to get vital information about countries where they operate, noting that, the government should change the concept of ‘ambassador designate.’
“They should be academically trained in foreign affairs for six months. They should collaborate with the Central Bank of Nigeria (CBN), the private sector, the Nigeria Ports Authority (NPA), and the airlines.”
Export promotion agencies, he said, should understand the dynamics of importaion and exportation as they affect the country’s economy.
“They need to understand International Commercial Trade (ICO terms) terms such as Free On Board (FOB), Cost Insurance and Freight (CIF) and Delivered At Frontier (DAF),” he noted.
He explained further that every country has a foreign policy, noting that Nigeria’s foreign policy should be tied to trade, so that the foreign reserves can go beyond $45 billion.
Isemede stated that all agreements with China and other international partners must be in line Nigeria’s foreign policy, trade policy and economic diplomacy, in consonance with Section 12 of the Constitution.
He added, “All agreements with China and other international partners must be in line with our foreign policy, trade policy, and economic diplomacy, in consonance with Section 12 of the Constitution, where the National Assembly has the greatest task to the nation (which is the ratification of all agreements entered into).
“It is not a sin to enter an agreement. But it will be a sin if an agreement is one-sided.”
Another individual who commented on the issue is the former Governance Adviser/Regional Coordinator, Department for International Development (DFID), Dr. Sina Fagbenro-Byron.
He said until Nigeria has a defined national interest which is not connected to the interest of the President, or of the ruling party, but one that is connected with the people, government might not be able to protect the interest of the people in trade and development agreements.
He also stated that it is the national interest that defines a country’s trade and development policy.
Fagbenro-Byron explained that if things are not set right, what the country would witness is an incongruent approach to trade.
He noted that regardless of the international trade partner a country is dealing with-whether China, United Kingdom, and United States, they might likely lose because “under that regime, your thinking and entry into trade are not driven by a national interest.”
According to him, “Everybody is looking for trade agreements with Africa, particularly Nigeria.
“We should examine the international trade agreements we have signed so far. The truth is that, Nigeria is not gaining anything and we are not likely to gain anything because our agreements are not signed in line with the national interest.
“China is doing business with itself. It does not matter whether it is China or any other partner; it is going to be exploitation, except we define what we want and take a position.
“As a nation, we should examine what our interest is. This ideal is another form of second slavery, because, it is an agreement you enter into, where you are the weaker partner.”