Nigeria signed a major deal with China this week as President Buhari made an important trip to visit its leader, Xi Ji Ping. Nigeria’s Foreign Minister, Godfrey Onyema, who accompanied Buhari on the trip to China, announced that the orient nation had offered a $6 billion loan to Nigeria to fund infrastructure projects, one of the key areas Buhari promised to address with Nigeria’s 2016 Budget. This came as a good news to many Nigerians as it now appears that Buhari has a clear economic policy. On the other hand, some Nigerians have expressed their reservations concerning this new development, claiming China was “scamming” Nigeria, a phrase that became an hashtag on social media this morning. However, what Nigerians can do is look at precedents i.e. China’s similar investment in other African countries, particularly Ethiopia.
Ethiopia has recently gained continent-wide fame for its development and achievements in the past few years. The country is one of the world’s fastest growing economies now, Africa’s fastest growing economy, thanks to government spending (tax driven) and Chinese investment. Ethiopia launched the first light rail system, in Sub-Saharan Africa in 2015 which links its capital, Addis-Ababa, to the neighbouring country, Djibouti. Africa’s current biggest economy and second biggest, Nigeria and South Africa respectively, cannot boast of one.
The responsibility for this light rail, which cost $3bn to build, was taken up by China after the World Bank and other Western donors had shown a reluctance to fund the project, to the surprise of Getachew Betru, the head of Ethiopia’s Railway Corporation. China not only constructed it, but provided most of the funding for it. The train, which was initially built to counter the challenges that Ethiopia’s drought this year would pose, has received an expanded vision. It has now acquired a Pan-African vision; it will expand to run through South Sudan, Sudan, Kenya and other East African countries. This move will surely see Ethiopia emerge as an economic hub in East Africa.
Nigeria seems to be taking a cue from Ethiopia and China. It plans to build a similar one which will run from its southern states to Lagos, its commercial hub. This project is going to be financed by China and is set to help the economic development of the country’s marginalised southern region greatly. However, projects like this need to be supplied with adequate power, something Nigeria does not yet have, but this is not so for Ethiopia. It recently announced that it made $123 million dollars as profit from the sale of electricity both at home and abroad to Djibouti, Kenya and Sudan, while also establishing links to five other East African countries. These have been done all through the help of Chinese electrical transformers.
Ethiopia also recently announced that its Grand Ethiopian Renaissance Dam will be completed in 2017. This dam will supply 6,000 megawatts of electricity, even larger than the whole of Nigeria’s present power capacity of about 5,000 megawatts. That number would make the dam Africa’s largest hydroelectric project and Nigeria could surely do with something like this.
Buhari, during his visit, promised China that all projects started by Nigeria’s former administrations will be completed under his tenure. Though this deal could see the influx of Chinese expatriates into the nation, it seems there is no cause for alarm about China ‘stealing Nigerian jobs.’ According to China’s ambassador to Ethiopia and the African Union, La Yifan, in 2015, “the best way to contribute to human rights is creating jobs and alleviating poverty,” The rate of Chinese expatriates to jobs created for Ethiopians is 1 to 20. And this has seen unemployment rate in the country decrease from 20.4 percent in 2009 to 16.8 percent in 2015, and is set to further reduce with the job potentials of the completed rail system and electricity grid.
Though, Nigeria’s inclusion of the Chinese Yuan in its foreign exchange currencies may not “crash the dollar” as some Nigerian media houses have reported, it would go a long way in creating a path for Chinese-built infrastructure in Nigeria, without the cumbersomeness of dollar rates. Ethiopia is Africa’s second largest population and land-locked too. Nigeria which has the highest population and is not land locked should definitely not be doing worse than Ethiopia if it wants to live up to its title as “Africa’s largest economy.” If Nigeria wants to truly diversify its economy, building its infrastructures is essential and it seems China is the best to partner with.