Why Chinese Businesses Like To Invest In Nigeria

Chinese Ambassador to Nigeria, His Excellency, Dr Zhou Pinjiang, during a meeting February 6, at his residence in Abuja bared his mind on the vision and strategy to expand the scope of his country’s relations with Nigeria especially in attracting Chinese companies to the country and securing Chinese funding for Nigeria’s economic development. Below are excerpts of his remarks at the meeting.

“I invited some Chinese businesses here (Nigeria). Some of them have been here for more than half a century and they have done very well. And the message I got from them is very encouraging. …The investment from China is increasing very fast. I met some businesses, they are doing very well. I’m not sure whether you know WIMCO. According to the ranking, WIMCO, though it’s a Nigerian registered company, the Head comes from China. His company has been here for decades. You see, when I was in the industrial zones in other states, I saw what was happening in China, nowadays and going back to ten years, twenty years. All the machines are busy operating and the workers were very busy. In that factory alone, that industrial park alone, every month, they manufacture 6000 tons of nails. Actually WIMCO employs more than 20,000 Nigerians here. That is why according to the Nigerian business ranking they rank 39th here.
“The Lee Group, they told me that even the slippers, out of ten Nigerians, eight are wearing their slippers. And they employed 26,000 Nigerians here. So why are these companies getting stronger and stronger, because I think they know Nigeria very well. Because they have been here for some time and have the Chinese background. They still have their connections and support network in China. So they mix their advantages in Nigeria and China. They act as a good mix. In Lagos we discussed and actually everybody think it’s a good idea to promote made in Nigeria with China. It would not be a bad idea. As we think of China and Nigeria cooperation, we are working basically on two fronts. One is the major infrastructure development projects, like the railways, highways. So you see last week, the Minister of Transportation announced that the China Exim Bank has cleared 1.275 billion USD concessionary loan to support the Lagos – Ibadan road. And with this clearance of the concessionary loans for Nigeria from China Exim bank, well over 5 billion USD. This concessionary loans, we are working mostly on infrastructural development, Zungeru hydro power and railway Terminus in Lagos, Abuja, Kano, Port Harcourt and the light rail in Abuja. And last year we completed the Abuja-Kaduna railway. And I know after the visit of my Minister, the Nigerian Minister of Finance kept sending more requests and we send it to Exim bank for consideration. We are all for them and we encourage China – Exim bank to do the assessment of whether we can do it or not for the concessionary loans. The category two, is for the US 60 billion dollars. For 2016 to 2018, a three year timeframe, we have allocated 35 billion USD for all of Africa as concessionary loans. And as Ambassador to Nigeria, I encourage them to do more business with Nigeria. So, we are open on that. I have confidence we can do even more, because both countries have a lot of potential. It will be mutually beneficial for the role of Chinese government. For the concessionary loans we have to provide the subsidy of interest to the Exim bank, because the Exim bank they charge at a lower rate but is good business. So the government has to subsidize the interest to them. So in this part we work very closely with the government. Some say, why do we borrow a lot from them, we say, we are open, because as we see the 35 billion USD will be used during the 3 -year time frame, but it’s not necessarily for Nigeria, maybe Liberia, Ethiopia, Kenya, but for us its open.
“Actually it’s a decision for Nigeria, to take the initiative. If you send a request, we can see it, if you don’t send the request we don’t know about it. But in no way are we imposing concessionary loans to any country. Actually you see, frankly speaking every year even to Nigeria, the Chinese government has to allocate around 200 million USD, as taxpayers money, in the budget to subsidize the Exim bank on its loans to Nigeria. What I’m saying is, we wish we could do stronger in this area, but it’s up to Nigeria, you have a choice. But I frankly, honestly talked with the Minister of Finance and the Minister of Budget and National planning, the China Exim bank is in no position to honour every request because to them the financial resources are limited. But I have confidence in this area.
“And another thing, I’m taking more interest in investment, because you don’t have to borrow. And in this area I shall say that the sky is the limit. (There are) huge potentials. You see, it’s possible, I think it might be right. Last year, more than 1/3 of the foreign direct investment to Nigeria came from The Chinese business, and we got the data from the Chinese side. And the Chinese businesses show strong interest in doing business here. Why? They are not here to help you or anyone. They are here to help themselves. They are for business and Nigeria is attractive for them to do business. And it’s why they are also keen on the made in Nigeria project with China project. Last year the trade volume between Nigeria and China declined very quickly. Last year, I think its 10.6 Billion USD, 2016, and the year before was 15 billion USD. And in the other year in 2014 it was 18 billion USD. You see it declined very fast. So what is the way forward for the business to work out? They floated this idea to me, that it’s better for them to turn trade into investment. If we can do investment here, that is a better way to solve the problem of foreign exchange or even the naira issue. The seed of the economic development of China town now as we call it ‘the supply side structural reform’. Why do we put so much emphasis on the supply side of the economy? Simple, over capacity of everything. Over capacity on anything, that is China’s problem. But here we met another supply problem. We can buy everything here, but you wish more products could be made in Nigeria. So even in the economic sense, we think we can work together on this project. And in the political perspective, made in Nigeria is the thing. How soon can this be achieved and it will benefit Africa as a whole. If one day, and I believe that day will come, Nigeria becomes the manufacture centre for Africa and the world, I think it is most credible. You have the population and the location, and the resources. You have all the things. So as we see it, if we could encourage more cooperation in the manufacturing sector in the investment area, then the practical cooperation between China and Nigeria, could be adequate. But if we have to do this, a lot of work has to be done. And I believe the media plays a very important role. So sometimes, according to our experience, the concept, the thinking, the philosophy is very important. In the early stages of the Chinese opening up to the world, not everybody saw it, (FDI), but it was a good thing. We tried very hard to tell our people if the foreign investment, the foreign businessman can make money here, then we can achieve our goals. In the same report we say, you make money, we achieve development. Because they are for business, everybody cherishes friendship but they are for business.
“At the end of 1978, China opened its doors to the outside world. Before then the FDI of China was zero, nothing. We had the Cultural Revolution. For 38 years, since 1978, until last year. We have attracted 1.7 trillion USD as FDI. And then even last year, it was 139 billion USD in China. And that means for 38 years we have used 1.7 trillion USD FDI. But now the tide is turning. Why? 2015 was the first time the outbound direct investment surpassed inbound direct investment. So, last year the FDI to China was 139 billion USD and the outbound, 170 billion USD. Back in the 1980s to 1990s, few Chinese businesses had the money to invest in their growth. But now these things are different. The relocation of the labour intensive industry has been happening, because the labour cost is rising very fast in China. They have to relocate to the neighbouring countries in Asia. And as we see, why not Nigeria, why not Africa? It makes sense. That is one thing. You are the expert to tell your people why made in Nigeria is important. Actually everybody knows, the problem is how can you achieve it?”

Source: Leadership