What Benefits from China? Featured

Tuesday, 19 April 2016 00:00 Written by  Published in Cover Story Read 599 times
Nigeria's President Buhari and his Chinese counterpart, Jinping Nigeria's President Buhari and his Chinese counterpart, Jinping

President Muhammadu Buhari of Nigeria took a 5-day working visit to China from April 10 to 15, 2016. His aim was to attract Chinese investors, technical assistance and aid. Ibrahim Adamu looks at some of the benefits Nigeria is expected to gain.

Nigeria’s president, Muhammadu Buhari’s first working visit to the People’s Republic of China came at a time the West African country was in desperate need of economic support, especially as its mainstay is proving to be incapable of sustaining its development.

Having travelled far and wide in search of allies that will believe in his resolve to diversify the Nigerian economy, thereby bringing foreign investment into the country, some Nigerians have expressed their worry in the way things have continued to get worse as the his government clocked a year in office.

But government officials have said that the visit to China was aimed at securing greater support from Beijing for the development of Nigeria’s infrastructure, especially in the power, roads, railways, aviation, water supply and housing sectors.

Presidency sources have earlier revealed that President Buhari’s meeting with President Xi Jinping, Premier Li Keqiang and the Chairman of the Standing Committee of the National Peoples’ Congress, Zhang Dejiang will focus on strengthening bilateral cooperation in line with Nigeria’s agenda for the rapid diversification of the Nigerian economy, with emphasis on agriculture and solid minerals development.

“It is expected that in the course of the visit, several new agreements and memorandums of understanding to boost trade and economic relations between Nigeria and China will be concluded and signed,” Femi Adesina, the special adviser to the president on media and publicity said in a statement to the press.

China, unlike America and European countries that invented aid “with strings attached”, is a relatively generous country that doesn’t so much compel its trading partners to behave in a certain way.

President Buhari himself has said that his trip to China, was necessary, perhaps because of the reality that everyone who went to China, including President Robert Mugabe of Zimbabwe, never came back empty handed. Chinese loans, because they are mostly negotiated with the state, are given on very liberal terms.

Buhari has said that Nigeria’s relationship with China is a development opportunity that the country cannot afford to lose, adding that his administration is committed to contracts signed with Chinese firms by his predecessor, Goodluck Jonathan. “China has the technical and financial capacity and the experience of development while retaining the goodwill to help

Nigeria. So, really, this is an opportunity Nigeria cannot afford to lose,” Buhari said while speaking to a Chinese news agency.

He added that “In spite of being the largest economy in Africa, Nigeria is still badly in need of these projects, which China, as the world’s second-largest economy, has the capacity to undertake.

“The opportunities that present themselves for us … are virtually limitless,” he said, adding that 62 percent of the Nigerian population is under the age of 35 and the jobless rate among this group is very high.

“The best way to tackle unemployment is to develop agriculture and the mining industry, which China has the capacity to help. Some Chinese enterprises have already been involved in the mining industry in Nigeria’s northern provinces,” he said.

During the visit, Chinese President, Xi Jinping offered $15 million agricultural assistance to Nigeria for the establishment of 50 Demonstration Farms across the country, according to a statement issued by presidential spokesman, Garba Shehu.

The statement said the offer was in response to President Buhari’s desire to make Nigeria self-sufficient in food production, adding that President Jinping agreed that Nigeria’s chosen path of development through economic diversification was the best way to go.

The statement said that President Jinping also expressed the readiness of China to set up major projects in Nigeria.

It listed the projects to include refineries, power plants, mining companies, textile manufacturing and food processing industries as soon as the enabling environment was provided by the federal

government.

The statement said that China and Nigeria also agreed to strengthen military and civil service exchanges as part of a larger capacity-building engagement.

The Chinese leader assured the Nigerian president that Nigeria would always have a special place in the affairs of the Peoples Republic of China.

President Buhari directed that technical committees be immediately established to finalise discussions on new joint Nigeria/China rail, power, manufacturing, agricultural and solid mineral projects.

According to the statement, the technical committees will conclude their assignments before the end of May. The statement said President Buhari welcomed China’s readiness to assist Nigeria in her bid to rapidly industrialize and join the world’s major economies.

The statement said that after the talks, President Buhari and President Jinping witnessed the signing of several agreements and memorandums of understanding between Nigeria and China.

They included a “Framework Agreement between the Federal Ministry of Trade and Investment of the Federal Republic of Nigeria and the National Development and Reform Commission of the Peoples Republic of China.”

Memorandum of Understanding on Aviation Cooperation between the Ministry of Transportation (Aviation) of the Federal Republic of Nigeria and the Ministry of Commerce of the Peoples Republic of China was also signed

Memorandum of Understanding between the Federal Republic of Nigeria and the Government of the Peoples Republic of China on Scientific and Technological Cooperation and a “Mandate Letter Between the Industrial and Commercial Bank of China and the Central Bank of Nigeria on Renminbi (RMB) Transactions’’ were also signed.

Also, Industrial and Commercial Bank of China Ltd (ICBC) and the Central Bank of Nigeria (CBN) signed an agreement on Yuan transactions, a Chinese Foreign Ministry official said.

“It means that the renminbi (yuan) is free to flow among different banks in Nigeria and the renminbi has been included in the foreign exchange reserves of Nigeria,” Lin Songtian, director general of the Foreign ministry’s African Affairs department, told reporters.

President Buhari, on his return to Nigeria, expressed satisfaction that his week-long official trip to China had yielded over $6bn additional investments for Nigeria, holding the belief that the agreements concluded with the Chinese during the visit would have a huge and positive impact on key sectors of the Nigerian economy including power, solid minerals, agriculture, housing and rail transportation.

He said, “In the power sector, North South Power Company Limited and Sinohydro Corporation Limited signed an agreement valued at $478,657,941.28 for the construction of 300 megawatts solar power in Shiroro, Niger State.

“In the solid minerals sector, Granite and Marble Nigeria Limited and Shanghai Shibang signed an agreement valued at $55m for the construction and equipping of granite mining plant in Nigeria.

“A total of $1bn is to be invested in the development of a greenfield expressway for Abuja-Ibadan-Lagos under an agreement reached by the Infrastructure Bank and Sinohydro Corporation Limited.

“For the housing sector, both companies also sealed a $250m deal to develop an ultra-modern 27-storey high rise complex and a $2.5bn agreement for the development of the Lagos Metro Rail Transit Red Line project.”

According to the president, other agreements announced and signed during the visit include $1bn for the establishment of a Hi-tech industrial park in Ogun-Guangdong Free Trade Zone in Igbesa, Ogun State.

He added that the Ogun-Guangdong Free Trade Zone and CNG (Nigeria) Investment Limited also signed an agreement valued at $200m for the construction of two 500MT/day floating gas facilities.

“An agreement valued at $363m for the establishment of a comprehensive farm and downstream industrial park in Kogi state was also announced at the Nigeria-China business forum.

“Other agreements undergoing negotiations include a $500m project for the provision of television broadcast equipment and a $25m facility for production of pre-paid smart meters between Mojec International Limited and Microstar Company Limited.

The President also visited the Sino-Singapore Knowledge City in Guangzhou, which showcases advancements by China in medical, science and technological inventions.

However, governor of the South-Western state of Ekiti Ayodele Fayose, raised the issues over President Muhammadu Buhari’s trip to China.

Mr. Fayose said the president was visiting the Asian country to borrow $2 billion as part of the N1.84 trillion programmed to be borrowed to finance the 2016 Budget, describing the move as an attempt to mortgage the future of Nigeria and its people.

The governor said the 2016 budget was not a reflection of the present economic reality in the country, adding that, “By the time they borrow N1.84 trillion to fund their N6.06 billion budget, I wonder how Nigeria will survive in 2017 when the Federal Government will be servicing debt with about 50 percent of its budget.”

In a press release issued by his Special Assistant on Public Communications and New Media, Lere Olayinka, Governor Fayose said; “In elementary economics, you don’t propose to spend more when your income reduces and I still can’t understand this Buharinomics in which Nigeria is going to spend N6.06 billion with crude oil bench mark of $38 per barrel when the country budget was N4.5 trillion in 2015 when crude oil bench mark was $53 per barrel.”

He said since the President claimed to have recovered and still recovering trillions of Naira looted from the treasury and over N3 trillion saved from the Treasury Single Account (TSA), the 2016 budget should be funded with the recovered fund.

The governor said he was alerting Nigerians of the danger in the federal government’s plan to fund the 2016 budget with loan, adding that: “Tomorrow, it will be said of me that I did not keep silent when Nigeria was being mortgaged to unnecessary debt.

He warned that with the proposed N1.84 trillion borrowing, $2 billion of which President Buhari is already going to borrow in China, the nation may soon be going the way of Greece because Nigeria will be borrowing N5 billion per day for the next 365 days.

“If your income was N200, 000 per month last year and your expenditure was N195, 000 per month; does it make any economic sense for you to propose to spend N300, 000 per month this year that your income has reduced to N120, 000?

“Only President Buhari can explain to Nigerians what manner of Economic theory encourages borrowing of N1.84 trillion to fund a N6 trillion budget. As for me, it is nothing but a voodoo economic theory and Nigerians must take note that the income that should accrue to them in five years’ time is about to be spent in one year by the Buhari’s APC government,” the governor said.