Saturday, May 30, 2009

Chinese Engagement in Nigeria Would Aid the Industrialization of the Country

Saturday, May 30, 2009

'Chinese Engagement In Nigeria Would Aid The Industrialisation Of The Country'

Deborah A. Brutigam, an associate professor of the School of International Service, was in Nigeria for two weeks as part of a research work on the impacts of Chinese engagement in Africa. Brutigam, who will tour not less than 12 African countries in the course of the project spoke to ONYEDIKA AGBEDO on her findings concerning Nigeria, with a verdict that it stands a chance to benefit from the relationship in the long run if well harnessed.

What informed your current visit to Nigeria?

I have been here for two weeks as part of a research project on Chinese engagement in Africa. I chose to come to Nigeria because I have been here three times before now.

However, my mission this time is to see how Chinese engagement is doing in the country and what impacts it is having on the country's economy. The intention is to approve or disprove what I read in the newspapers about China and Africa.

The study is part of a book project I am writing a called the Dragons Gift, which will tell the real story of China in Africa. I have visited some countries in Africa in for this purpose. I have been to Sierra Leone, Tanzania, Zambia, Mauritius and South Africa and I expect to go to Zimbabwe and Mozambique soon. I have an assistant that is also going to Ethiopia, Egypt, Kenya and Uganda. He will equally go back to Zambia.

What are your findings so far from these expeditions?

Well, I would say it is a mixed impact here in Nigeria. On the one hand, a lot of Nigerian manufacturing companies have been battered by competition. I went to Nnewi in Anambra State where I first visited in 1991 and then in 1994 and found that a lot of the industries I visited then have folded up because they could not face the competition from China. People said Nigerian industries don't really have a fair chance to compete because of the problems of power, poor road networks, unpredictable taxes, poor water supply and poor security, among others. These problems combine to make their products and services cost higher, which results in unfair competition.

On the other hand, one can also see some very interesting signs in the Nigerian engagement with the Chinese companies. In Nnewi I found out that there are some robust factories in the town, which had Chinese partners. There are other factories that had only Chinese technical partners where they don't put in any money but put in the expertise. This was interesting to me because such partnerships are helping some new industries take off again in Nnewi. So, on the one hand is the Chinese competition and on the other hand you have the Chinese stimulating industrial development in Nigeria.

The competition might seem harmful to the Nigerian economy at present but in the future, I think it is quite possible that the technical cooperation could aid in the industrialisation of Nigeria. It is possible.

Of what benefit is this study to you and the American academic community as a whole?

Actually, I was commissioned to write the book by the Oxford University Press in England. They asked me to do that because 10 years ago, I published a book on Chinese aid to Africa. Initially, not many people were interested about China and Africa and I was one of the few experts that really undertook to look at that. So, when the Oxford University Press learnt that I had worked on in the past, they asked me to write a fresh book on the topic for further explanation and understanding.

I think the United States and Europe are very concerned about China. In fact, I find the United States and Europe more concerned about China coming to Africa than Africans themselves. It makes me think that a lot of people are afraid of China in my country and see China as a threat to American interest. May be, they also think that China is a threat to Africa. So, that is what I am trying to work out, to find out whether China is really a threat to Africa or it is merely being misconceived. I would also be looking at what the good things about this relationship are and then the demerits. So, I am trying to sieve facts from fiction, realities from myths. I may not be able to get to the bottom of if here but I think by being here, I would be in a better position to forge ahead than if I had not come at all.

I visited the Chinese Embassy in Nigeria and they gave me some statistics. I understood that they have invested about $6 billion so far in Nigeria. So they are growing in putting industries here. I don't know how Nigerians regard them; what the impression is, but I think it is interesting that they have been here. Some of the companies have been working in Nigeria since 1979. That makes it 30 years. So, it has been a long time and a long relationship.

What material benefit do you hope to gain after this study or you are just doing it for academic fulfilment?

As a scholar, I think there is a benefit to understand what is really happening between China and Africa. As I earlier said, there are a lot of people that are interested in the topic. But I think they have some mistaken ideas already that have become widely accepted.

There is this believe that Chinese aid is so big on Africa, but it is not. There is also the belief that China is only interested in oil but it is interested in business. The trading between China and Nigeria is mostly Chinese export to Nigeria. Last year Nigeria exported almost no oil to China but they exported a lot of goods to the country. For America, I think China is competing really with us. They are penetrating our markets. So, they are just competitors like Japan is today and they are not as threatening as some people in America seem to think. I don't think they are very different actors in Africa.

How would you react to the view in some quarters that Nigeria has become a dumping ground for Chinese products, which are allegedly sub-standard mostly?

I guess this is the way to look at it. China produces some of the best products in the world now. But they are also producing very poor quality products that are very cheap. So, when Nigerian traders go to China to import goods to the country, they have a choice. They can buy the best quality or go for the cheap goods. The Chinese would sell to them. So, what they bring back is a lot of what you have in the market. If you go to a shopping mall in Lagos, you can get very good quality things from China and you will pay more. But if you go for the cheap ones, which are of poor quality and it breaks down the next day, then you got what you bargained for. So, I would not say that they are actually dumping their goods in Nigerian markets. The technical definition of dumping is selling something below cost, which I believe is not what is going on. It is only a question of ensuring proper regulation by the authorities to safeguard the health of the citizenry.

We have had the same issue in America and even China in the past. So, these things are problems elsewhere and it is probably as a result of an early stage of capitalism without good regulatory systems in place. So beefing up your own standards, health inspectors and borders would help to protect Nigerians. But at the end of the day, you get what you paid for in terms of the quality of goods.

Let me take you back to your trip to Nnewi. What exactly were your findings about some of the companies you visited in the past that have folded?

Let me say that it is natural for companies to fold. It is unnatural for companies to succeed. If you look over a 10-year period and the businesses that were started then, most of them have gone out of business. That is the natural way that it happens. It is competition.

An Australian economist that visited the United States sometime ago gave us this idea of creative destruction. He said capitalism is not about destruction but about creative destruction because new products and new competition will make things better. So, that is one thing that is going on in Nnewi. Another thing that has happened over the course of industrialisation is that some of the smaller companies will go into a business and after sometime become bigger and diversified. This has also happened in Nnewi.

There is the Ibeto group, which was before now a very small business until it grew and diversified. There is also Chikason, which started off an agro industry in a very small scale but it has now become very large. There is Innoson, which started with a motorcycle assembly. Now he has built a factory in Enugu where he would be producing tyres and assembling vehicles. There are many more companies like that which have taken the place of the other ones which are using simpler technologies and not able to compete.

It is probably the result of Nigeria liberalising trade over the past decade over the past decade or so and making competition greater for Nigerian manufacturers. But again if the Nigerian government could guarantee infrastructure, a lot of businesses in Nnewi would bounce back because they are very entrepreneurial. Inadequate infrastructure constitutes extra costs for manufacturers and they don't have these kinds of problems in China by and large.

Which other parts of the country do you intend to visit apart from Nnewi and Enugu?

I have been to Abuja, the Federal Capital. I am now in Lagos where I will be visiting some of the companies.

When do you hope to complete the study?

Well, I have gone very far now and hope to get the work out soon.

With what you have seen so far, to what extent do you think China could assist in the industrialisation of Africa?

The Chinese are interested in investing outside their country now. They have a policy called the New Centre Back 2001, otherwise known as going global. For over a period of 20 to 30 years, the Chinese government has invited foreign investments into China. They have invited foreign industries and technologies and learnt about how to do things. Now the government is try to push Chinese companies to go out and become multinational corporations and invest overseas. So they have been doing that since 2001 and are interested in coming to Africa.

You may not know it but there are two special economic zones that the Chinese are setting up in Nigeria. The Chinese found that the special economic zones were very useful for their own development in the past and now they want to do such overseas. Right now they have seven in Africa with two situated in Nigeria. These zones would have their own power supply and infrastructure and would be close to the port and I think they would be doing manufacturing and exports from there. They are doing it in Zambia, Egypt, Algeria, Ethiopia and Mauritius with the support of their government. And so, I see their interest in the industrialisation of Africa as very real. I think you would be seeing more Chinese companies coming here when the zones are finished.

There will be benefits in the form of employment. You can also benefit through technology transfer. I don't know what the system is but it is possible that Nigerians could also invest in those special economic zones. I don't know for sure if it is possible but I know in some countries it is possible for local industries to invest in those zones. And if your government is smart it would ensure that Nigerians could also invest there.

This is your fourth visit to Nigeria. What is your impression about the country?

Well, when I first came here there was no Abuja so that is a big change. But I think a lot of things are still the same. A lot of the challenges are still here especially in infrastructure. When I came here in 1987, people said NEPA meant 'Never Ever Power Again.' And they are still saying that today. I am wondering when it would become over.

I think the country should at appoint figure out something other than NEPA to provide power. In Abah there is an interesting experiment going on by Geometrics. I didn't visit the place but I understood the man is trying to do an independent power production. If more of this could happen around the country, may be the people could take care of the power problems themselves.

I keep coming back to Nigeria because I really like it; I enjoy the country. And Nigerians are the most amazing people. They are so intelligent, so full of ideas and creativity that I think if channelled to how the country could be developed, it would just take off. Nigeria is a country with so much potential but being held back. I wish it good luck.

1 comment:

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