Nigeria to China: we want to climb up the value chain

 by Peter Vanham

 

Is the honeymoon of the unofficial Africa-China wedding over?
Last week, the Nigerian Central Bank voiced its discontent about the unfavorable trade balance with China – and made it clear Nigeria was already looking elsewhere for friendship (and maybe more).
Over the last decade, China built up a privileged trade and investment relationship with Africa. It invested heavily in infrastructure, and in turn got preferential treatment for acquiring Africa’s raw materials.
But ambitious countries like Nigeria seem less and less satisfied with the infrastructure-for-resources arrangement with China. At the World Economic Forum last week in Davos, Governor Sanusi Lamido Sanusi of the Nigerian Central Bank (pictured above) hinted that Africa – or at least Nigeria – wants to alter the terms of that relationship.
The Governor, voted by Time Magazine as one of the world’s most influential people made it clear he wouldn’t content himself with only being the producer of only raw materials for China. “How can we move up the value chain? China still uses raw materials from Africa, and Africa still buys Chinese manufactured products,” Lamido Sanusi said. “We have to get China to produce products on African soil. We have to take advantage of the Chinese market.”
Lamido Sanusi acknowledged that African countries still had a huge problem with productivity. But he said that unless Nigeria and other African countries start manufacturing products themselves, it would be stuck with 5 to 6 per cent growth at best – a rate that wouldn’t allow Africa to leapfrog towards higher levels of prosperity.
Yi Gang, the deputy governor of the People’s Bank of China, and also present in Davos last week, refused to see Lamido Sanusi’s remarks as a criticism to the Sino-African relationship. “By and large, Africa-China co-operation over the last two decades has been very good,” he said. “I think, as labour cost increases, some manufacturers will move to Africa and elsewhere. And we would love to see more manufacturing in Africa.”
In any case, it seems like Nigeria is growing more confident and ambitious about itself – and isn’t just counting on China to grow.
Nigeria sent one of the largest government delegations to Davos this year, with the specific objective to attract investment. Given the footprint of Chinese investors at the forum (small), and that of American, European and Indian (large) it seems unlikely Nigeria was targeting China for those investments.
Moreover, Governor Lamido Sanusi said he was bullish on his economy’s prospects: “double digit growth should be no problem for us,” he said. “So far, our growth had a small base, as we lacked manufacturing. With our planned investments in ports, airports, roads and education, we should be able to move up the value chain.”
Yi Gang, for his part, assured China would continue to support in infrastructure and education investments in Africa. Not everyone wants a costly divorce.

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