Chinas fdi to sub-saharan africa evidence of nigeria

This has attracted scrutiny, questioning the impact of these investments and if they are in line with the goals of Nigeria. The south-south foreign direct investments (FDI) have been successful in Nigeria since 1992-2010. This paper investigates the reason behind this success and the effects FDI has had in Nigeria. This paper will examine growth in the economic relationship between the two nations through data collection from relevant secondary sources. The conclusion is that FDI has resulted in positive growth in the Nigerian economy and success in Chinas goal to expand to Africa. Using Nigeria to enter the Economic Community of Western African States and increase their influence in the Nigeria oil and gas department. The mentioned countries had needs that complimented each other. The Nigerian nation needed huge investments due to their financial deficiency whereas China needed a place they can expand their market.

Thus investing in Nigeria helps improve the financial status of Nigeria while simultaneously creating a market for China goods in Nigeria (Weistbrod et al. China is known worldwide for its competitive construction companies. The relationship began in 1971, China was provided amour in support of the Biafra war. There are estimated reasons for the partnership in 1971. Nigeria got registered as a member of the Organization of Petroleum Exporting Countries in 1977. The oil industry was thus seen as a credible industry with supervision and regulation of policy enabling control over its functions. Nigeria was in a quest for resources to secure its energy, China offered developmental support to this country (Renard, 2011). whereas Nigeria to China export value was $899M. Nigeria is importing at higher rates that the received exports to china (Alabi et al.

The imbalance lies negatively on Nigeria. The imports of Nigeria are Vehicle parts generators, motorcycle, rubber, machinery and mineral working tools. After the diplomatic agreement between China and Nigeria was around USD 2. This paper examines the partnership between Nigeria and China approximately from 1971 and onwards. This paper analyses the partnership between the two countries, and the development initiatives that affect their economy directly and indirectly. This paper examines the effects of FDI in Nigeria, given that Nigeria is used as an investment hub for China to gain access to its petroleum and oil to enable it to sustain its ever-growing economy. This paper aims to evaluate the FDI partnership between Nigeria and China. Additionally, the paper will discuss the benefits China brought to Nigeria other than the measures taken under self-interest.

• To find out if Chinas FDI initiatives relative to neo-colonization. • To find out if the public approves of the China investment initiatives in Nigeria. LITERATURE REVIEW This paper examines the importance of the FDI on Nigeria’s growing economy by analyzing the dependent and independent variables. To achieve this, this paper will discuss the evolution of the FDI in Nigeria and how the China-Nigeria relationship has evolved (Oyeranti et al. There will be a proper explanation on the impact of FDI ob diplomatic connection and the economies of China and Nigeria. Federal Capital Territory hospital in Nigeria received a donation that enabled them to accommodate 50 beds. There has been a significant increase in Chinas FDI to Nigeria that occurred between 1999-2006; this went up to approximately $5. million in 2006. This is indicated in the figure below.

Figure 1-Foreign Direct Investment To Nigeria(1999-2015) Table 1-Statistics of China’s Outward FDI to Nigeria (1999-2015) Year FDI Inflow YEAR FDI in flow 1999 $55000000. The purpose of these constructions was: • Facilitation of the development of the state and create an increase in the FDI: Kajola Specialized Railway Industrial Free Trade Zone • Ensure the rural livelihood benefit from employment. The processing companies to receive rice supply from the local farmers: Ofada Vee Tee Rice Limited. • Actively engage and see-through manufacturing activities: Ogun Guangdong Free Trade Zone (OGFTZ): • Create a market for about 120 shops meant for Chinese firms: China Town in Lagos. • Attract foreign investment and establishing an offshore zone for economic growth. After the Tiananmen massacre, China and Africa begun trading in the late 1980s. The agreements were based on, technical cooperation, investments, telecommunications, among others.

This was meant to ensure two-way investments benefiting both parties involved, (Oshikoya, 2008). The president mentioned that he had hopes that China and Nigeria would work together to improve the mutually beneficial trade activities, railway, and telecommunication construction, electric hydropower, investments, agriculture, and the manufacturing sector. This creates a possibility for the establishment of an innovative political and economic order that exists internationally. China mentioned that they aim to strategically improve its relations and cooperation with Africa. The News reports indicate that the Minister of Railways, Sheng Gaungzu was sent to attend the inauguration ceremony in May that year, (Kolstad et al. This mended the relationship between the two countries thus they freshly committed to the improvement of their economic development and strengthened bilateral relationship that existed under this regime. China attempted to solve the challenge of power shortage Nigeria was experiencing in 2013.

This was achieved through their investment in the construction of the Hydro-dam and provision of technical aid to ensure its successful completion (Chen et al. China also offered support to the agricultural sector in Nigeria. The Chinese State-owned enterprises (SOEs) dominating factors from energy to telecommunications is privately embraced by china. China dominates SOEs in china and sub-Saharan African countries as well. This means, in the mining industry, 30% of worldwide mineral services belong to Africa, in this the production controlled by Chinese SOEs is 15%. This initiative is strategically designed to ensure Chinas share in the major industries in sub-Saharan Africa (Izuchukwu et al. The Nigeria Telecommunications Limited was sold to New Generation Telecoms Company a Hon Kong-based Chinese Unicom. The questionnaires were issued to 250 African students as well as Nigerian Faculty members.

The table below shows the results from the survey, Table 4, shows that 24% of Nigerians oppose the idea that china in anyway practices activities that indicate neo-colonialism in their country (Sautman et al. This thus means china is seen as a developmental partner and not a threat. Table 3, shows the thoughts of Africans on the similarity in China-African interests. Surprisingly only 8 percent of Nigerians agreed. Nigeria 5. Sudan 5. Total 12. Number Source: Sautman and Hairong (2009) TABLE 5-Reported Satisfaction with “Chinese Companies that Work on Large Projects in My Country” Country Very Satisfied Neutral Dissatisfied Very Number Satisfied Dissatisfied (%) (%) (%) (%) (%) (%) Ghana 8. Nigeria 12. The table below indicates some of the agreements between Nigeria and China: TABLE 7- Major Agreements Between Nigeria and China (1997-2010) Year Agreement 1997 Joint Communiqué on the Establishment of Diplomatic Relations between the People’s Republic of China and the Federal Republic of Nigeria 2001 Agreement on Trade, Investment and Protection 2002 Agreement for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Tax on Income Agreement on Consular Affairs Agreement on Tourism Co-operation Agreement on Co-operation on Strengthening Management of Narcotic Drugs, Psychotropic Substances and Diversion of Precursor Chemical 2003 Agreement of South-South Co-operation among China, Nigeria and FAO 2006 Memorandum of Understanding on a Strategic Partnership 2009 Agreement against fake products exported to Nigeria from China 2009 Memorandum of understanding on promotion between Ogun State of Nigeria and Zhejiang Province of China 2010 Memorandum of understanding on Peace Co-operation Source(s): Egbula, M.

Zheng, Q. West African Challenges - China And Nigeria: A Powerful South-South Alliance. Sahel And West Africa, 5. oecd. The research methodology entails a series of secondary sources dealing with costs, benefits and impacts of the study subject. Sources used are obtained from peer-reviewed journals, articles, books, blogs and news reports. This paper obtains options and analysis angles through qualitative analysis to examine the subject topic of this research. The research is qualitative as the methodology used utilizes several secondary sources based on costs, benefits, and impacts of the subject. These are sourced from articles, books, peer-reviewed journals, blogs, and news reports. ACF analyses series of actual data values. The ACF equation in this study goes as: Equation 2 Indicates serial correlation coefficient stock returns at lag k. Rt indicates stock returns with R as the number of observations.

Unit Root Test To avoid spurious regression, the ADF test and Philips Perron test were used to find out whether each series of data has a unit root and is integrated. The otherwise non stationary variable changes to be stationary after a singular difference. Yt is a matrix. Wt is white Gaussian random vector. co is a granger of cj if one of dj =1. Xt is a matrix. Where: if y is well predicted from past values of y and x than from past value y alone this thus indicates that y is caused by another x variable. Is the China-Nigeria relationship mutually beneficial to both countries? 2. Is Chinas FDI initiatives in Nigeria another form of neo-colonialism? The Nigeria-China bilateral trade since 2000 is indicated in Figure 4 and Table 10. FIGURE 4- Nigeria-China Bilateral Trade Statistics, 2000-2008 (USD millions) Source: Ayoola, T.

IISTE. org/Journals/index. Thus the partnership between the two countries is made possible. Nigeria ends up adapting the manufacturing skills, trade patterns, the education has given and infrastructure that is used in China. Hence for the Nigerian economy to grow, China has to first develop and expand. The Nigeria n recourses benefit China extensively, thus China is crippling the ability for Nigeria to become self-sufficient and economically stable. This exploitative nature might cause a diminishing effect on the Nigerian economy if not addressed. The relationship between the two counties is a win-win with both countries aiding each other in achieving their goals. The Chinese economy has grown as a result of the support obtained from African countries. The strategic partnership between China and Nigeria has benefited Nigeria greatly through FDI, however, the aid obtained is dependent on what China stands to gain as a result.

The Niger delta is historically known for exploitation and oil degradation in Nigeria, questions have been raised regarding the interest of the Chinese. Nigerian population questions whether the sole interest of the Chinese is to maximize oil extraction without taking environmental precautions. Nigeria’s domestic market is not a match for the modern growing technology. Thus there is a need for China to aid the market industry in Nigeria to create a Nigerian extensive market that can sustain their upgraded technological goods. Given that this is a win-win relationship, the Chinese use Nigerian fuel as an energy source that aids in production in their country. The product requires a market and an external market offers bigger profitability opportunities. Thus China needs to improve the Nigerian market in order to make their produce relevant in Nigeria.

This means that the production rate of indigenous goods increases as well. This is where the challenge comes in. The Nigerian market has been taken over by Chinese goods. Yet the Nigerian market is growing as well and the local goods need to find a market for their produce as well. The Nigerian local products end up competing for the same market as Chinese goods. Despite the effects of the fire on the 40 Nigerians that were caught in this incident. There was neither trace of recorded compensation given to them nor any testimony relating to the same. This only indicates that the Nigerian lives are not valued by the Chinese, which can go to support the initial argument shown in this report; that the Chinese have placed value on the Nigerian recourses over the Nigerian lives and the environment.

As earlier stated the Chinese firms majorly employ the Chinese experts to run these firms. This goes further as the goods brought into Nigeria from China are finished products. This was until 2009 when an agreement was signed between China and Nigeria limiting the importation of substandard goods in Nigeria from china. China responded positively to this agreement and limited the low-quality goods that were flooding the Nigerian market. This response from china improved the FDI relationship between the two countries. The benefits gained by Nigeria from the Chinese FDI are clearly evident. The Nigerian economy is improving. The funds come in as investments, low-interest loans, infrastructure developments and trade activities. A successful FDI relationship between two countries strongly relies on the signed agreements involved. The agreement change over time due to different reasons: observed effects of the agreements, change in political power, and change in interests, unfavorable circumstances and failure to meet the terms of previous agreements among other reasons.

Nigeria has had significant debt relief as a result of the Chinese FDI. The aid offered by China in the form of humanitarian assistance, technical cooperation, medical assistance, infrastructure, materials and goods, and low-interest loans has taken Nigeria a long way in economic growth. This thus creates the need for measures such as the FDI. Countries like China are experts in construction industries among other skills. China is a developed country that is economically stable and experiencing a steady developmental and financial growth. This thus means china is true of a constant supply of energy. Africa, on the other hand, is a continent rich in natural resources and economic superpower countries are in a quest to seek these resources. The assumption would be that over the years Nigeria has partnered with China, the country would have developed massively but rather that is not the case.

It only portrays China as a neo-colonial power whose significantly growing economy is dependent on resources. Thus it is seen as a country offering FDI with the aim of exploiting Nigeria’s natural resources. Chinas position in the world economy has made a significant improvement to play a significant role in the global market whereas Nigeria has not matched up to such a major improvement. Nigeria needs to maximize its relationship with China. Thus Nigeria needs to seek and apply strict measures to eradicate their corrupt political system and develop policies that protect their country from the exploitation of any form. References Ogunkola, E. O. Bankole, A. S. China’s Trade and FDI in Africa.  China and Africa: An emerging partnership for development, 25. Alabi Oyeranti, G. Adetunji Babatunde, M. Olawale Ogunkola, E.

M. Ogunkola, E. O. The impact of China-Africa investment relations: the case of Nigeria. Kaplinsky, R.  Global Economy Journal, 12(4), 1850271. Sautman, B. Hairong, Y. African perspectives on China–Africa links.  The China Quarterly, 199, 728-759. Bräutigam, D.  Learning from China?: Manufacturing, investment, and technology transfer in Nigeria (Vol. Intl Food Policy Res Inst. Oshikoya, T. W. Cleeve, E. How effective are fiscal incentives to attract FDI to Sub-Saharan Africa?.  The Journal of Developing Areas, 135-153. Eneji, M. A.  Journal of World Business, 47(1), 26-34. Chen, Y. Sun, I. Y. Ukaejiofo, R.  British Journal of Economics, Finance and Management Sciences, 11(1), 84-107. Mlachila, M. M. Takebe, M. M.