WELCOME CHINA, BYE BYE AMERICA!

Three news items dominated the air waves last week. China grants Nigeria, 6 Billion Dollars loan, Nigeria agrees a yuan swap with China and Nigeria shuns IMF loan. All happened last week. That story shows how things have changed rapidly. For long, America seemed to have opposed the growing influence of China in Africa. Is the game lost in Nigeria? May be not. 

President Muhammadu Buhari ( PMB) in continuation of his global travels went to China last week and came back with a basketful of goodnews. Perhaps the best in all his travels. The generous loans are exciting especially at this time. Nigeria is in dire need of funds to meet its large deficit in the 2016 budget. This loan will be applied to infrastructural development and the development of other economic sectors like Agriculture and mining. Some of the facilities were offered to a couple of Nigerian Private sector companies including Dangote industries( Cement) the North-South Power Company Ltd( Power), Granite and Marble Nigeria Ltd( Solid Minerals), Mojec International Limited and Microstar company Ltd ( Television broadcast equipment & Pre-paid Meters) and the  Nigeria infrastructure Bank(infrastructure). Other beneficiaries of the loan package include the Lagos Metroline, the Ogun-Guangdong free trade zone and the comprehensive Farm and industrial park in Kogi State. In addition, the Chinese President Xi Jinping promised to support Nigeria in what ever other areas they needed help, most especially in Agriculture. As one paper reported it, PMB was given an 'open Cheque' to fill and cash as he wanted. No other Country has gone this far in support of Nigeria.

But the greatest news from China was the news of the Yuan swap. Nigeria will now keep more of its foreign reserves in the Chinese currency. And Nigerian Businessmen who do business in China, may no longer need the dollar, they can now change the Naira straight to the Yuan and transact their business. With the scarcity of the dollar, this will bring a great relief to many Nigerian businesses. And considering that China has become Nigeria's biggest trading partner since  America stopped buying Nigeria's crude Oil, this development has very far reaching implications.

For me, this is one the most significant developments in the economy since PMB came to power. It is a bold move which has a lot of strategic and diplomatic connotations. China over the last decade has been courting Africa and as I mentioned in the first paragraph, America has not hidden its uneasiness with this. China built a new Conference hall for the African Union in Addis Ababa and many criticized it but that did not stop China from pushing to make inroads into Africa. The greatest tool China has been using is soft loan usually packaged in joint project sponsorships. China embarked on this strategic outreach essentially to provide outlets for its technology , Products and manpower. With 1.2 Billion Mouths to feed and a growing technological base, it needed to create new markets to release the internal pressure. Also, China saw an opportunity to fill a growing gap for funds- aids and commercial in Africa. As Western  aids and loans either declined or became more difficult to access,China with its more liberal conditions stepped in and has continued to push since then. Countries like Kenya,South Africa and Zimbabwe have all jumped on the Chinese band wagon.

With these new MOUs signed or renewed with the different banks and funding institutions in China, the relationship with China has been taken to a new level. When America suddenly stopped buying Nigeria's crude petroleum, China came to the rescue, along with India. Today, China is Nigeria's biggest trading partner. As at end of 2015, Nigeria's trade with China grew from 11.76 Billion Dollars to 14.94 Billion ( +27%) while that with America declined from 9.9 Billion to 4.9 Billion dollars( -50%).And so with these new arrangements, China will officially become Nigeria's main trading partner and the volume will jump higher. 

At some time, the Uk was Nigeria's biggest trading partner, then for many years it lost the position to the USA and now the swing to China signposts a major ideological switch. And this is the crux of the matter. This apparent ideological switch was highlighted by the reported refusal of Nigeria to accept the IMF Loan. Yes, it makes sense for PMB to go and get help where he can easily get it. America and the West have become more stringent in their conditionality for aids and loans and given the urgent need to find money to cover the 2.2 Trillion Naira 2016 Budget deficit, it is reasonable to accept the Chinese embrace-"the man wey wan die, meet the man wey wan kill"

The only caution is that Nigeria must fully understand the consequences of this ideological economic switch, so that we can prepare for them, because as we say in Physics: 'every action, has an equal and opposite reaction'. Will America, France & Britain clap for us? Certainly no. Will it affect our relationships? Certainly Yes. Will it lead to reducing aid and support from the West? May be. In addition to external responses, we must carefully assess the impact on our domestic economy. How many Chinese are coming with these loans and joint funded projects? I know that the Chinese follow their money? What of the Labour relations and work ethic? How do we put safeguards to avoid backlashes from the labour unions and from the communities. Chinese do not have much problem with our operating environment and know how to find their ways. Therefore as we sign off on these agreements, we must be sure we take all these matters into consideration, so that we do not turn around to complain against the Chinese or fight them as the Ugandans did against the Indians during the reign of Idi Amin.

On a final note, we must not make this look like 'Bye Bye America". We must do our utmost to maintain a healthy balance of trading and other economic relationships with America and the West. IMF or World Bank loans come with tough conditionalities, but those conditionalities help us to improve our governance and accountability. Global Technological innovations come mostly from the West and we must have easy access to these innovations. So at the end of the day our the need to run a globally competitive economy that attracts loans and investment from America, the West , Asia and the East will not be compromised by this "Chinese Breakthrough"
Mazi Sam Ohuabunwa OFR 

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