THE recent successful negotiation of investments worth $6 billion for the development of infrastructure in Nigeria is good news for the country. The investments, which are part of the gains of President Muhammadu Buhari’s recent visit to China, will go some way in addressing the appalling infrastructural deficit in the country. Although the president trip elicited criticisms in some quarters, we heartily welcome the investments. The serious infrastructural problem in the country is such that many Nigerians will be glad about this intervention by China. It is, indeed, a positive outcome for the president’s first official visit to the Peoples Republic of China.
Minister of Foreign Affairs, Mr. Geoffrey Onyeama, who briefed the media on the coming Chinese investments in the country in Beijing last week, described the intervention as “credit that is on the table” as soon as Nigeria identifies the projects. He further explained that the investments would not require the signing of any agreements.
Besides these investments, China has also offered Nigeria a $15million agricultural assistance. The facility is for the establishment of fifty demonstration farms across the country. The offer, according to the Presidency, was in response to President Buhari’s promise to make Nigeria self-sufficient in food production. Other deals reached between Nigeria and China during the president’s visit include the construction of rails and power plants, $55m solid mineral projects and $2.5m for housing, textiles and food processing industries.
There is also a currency swap deal which will allow Nigerian banks to issue letters of credit in Chinese currency in place of the dollar or Euro. The agreement, which was signed between the Central Bank of Nigeria and its Chinese counterpart, is aimed at facilitating trade between the two countries. A Memorandum of Understanding (MoU) was also signed to strengthen military and civil service exchanges. This is part of a larger capacity building deal between Nigeria and China.
Altogether, we consider the president’s visit to China worthwhile. We are particularly happy about the various MoUs signed with the Chinese government, especially the ones on infrastructural development, establishment of demonstration agricultural farms and the increase in the country’s annual scholarships to deserving Nigerians from 100 to 700. The scholarships are for both vocational and technical training.
The planned support for infrastructural development in Nigeria is heartwarming. Currently, deficit infrastructure is one of Nigeria’s biggest problems. If the investment from China is properly managed, it will go a long way in fast-tracking key sectors of the economy such as rail and road network and other enablers that can encourage investment in the economy. In the same vein, the $15m facility for the establishment of demonstration farms will help to diversify the economy and improve food security.
We, therefore, urge the government to quickly and carefully identify the projects into which these investments will be ploughed. The investment funds should also be quickly mobilised so that work can begin on the projects as soon as it is feasible. Nigeria is sorely in need of these projects that are expected to create jobs and have other multiplier effects on the economy.
Nigeria’s economy needs fresh impetus and direction. This renewed friendship with China, which is the world’s second largest economy with an impressive annual economic growth of over 10 percent between 2009 and 2015, is good news for Nigeria. Although China’s projected economic growth for 2016 is 6.7 percent, the lowest in seven years, the country has demonstrated exemplary leadership on how to grow national economies by looking inwards. Nigeria, as a global emerging market, can learn a lot from China.
As we welcome these investments from China, there is a compelling need for a balance in the trade volume between our two countries. This is currently disproportionately skewed in favour of China. The investments from China can only serve Nigeria’s interests if they are deployed for the overall development of the economy. In the last few years, especially during the erstwhile Goodluck Jonathan administration, several facilities were procured from China with not much impact on the economy.
For example, in May 2010, the Nigerian National Petroleum Corporation (NNPC) signed a $23bn MoU with China State Construction Engineering Corporation (CSCEC) to construct three oil refineries and a petrochemical plant. In July 2013, the immediate past administration also signed for a $3bn loan from China for building four new airport terminals; $500m loan for the Abuja light project, $171m for the completion of the Galaxy backbone project and another loan of $11.97bn to build 1,402km Lagos-Calabar coastline railway. We need to demand progress reports on these loans. That is one sure way to ensure that the latest investments from China are judiciously applied.
With a lot of loans already taken from Chinese financial institutions such as Exim Bank of China and from other multilateral institutions like the World Bank, African Development Bank (AfDB) and Eurobond, among others, it is necessary for Nigeria to exercise caution on the spate of loans being taken. This is in view of the nation’s rising debt profile and the budget deficit that is now at an all time high of $12trn and $2.2trn, respectively.
All in all, government should review the state of the projects for which all the recent loans were obtained. It should also quickly determine the projects that would be funded by the latest Chinese investments and move ahead with their execution in the best interest of the nation.