Buhari with Chinese President Xi Jinping
Former
Director-General of the Nigerian Institute of International Affairs
(NIIA) Prof Bola Akinterinwa, in a paper delivered at the Africa Today’s
summit on China-Africa relations examines President Muhammadu Buhari’s
visit to China. Excerpts:
President Mohammadu Buhari (PMB) paid
his first visit to China as President of Nigeria on Sunday, 10th April,
2016. It was a 4-Day State Visit aimed at enhancing bilateral
relationship with China and securing the support of the Chinese for
Nigeria’s development agenda. For this purpose, PMB led a high-level
delegation to China.
The visit took place amidst many
controversies: complaints about the many travels of PMB: the visit to
China being the 28th in ten months of his tenure; refusal to sign the
2016 budget before travelling to China; unending crisis of fuel
scarcity; deepening discontent over power outage; the trial of the
Senate President, Bukola Saraki; unveiling of high-level corruption
charges by the Economic and Financial Crimes Commission (EFCC) against
public officials, notable elder statesmen and professional politicians;
and perhaps most importantly, controversy over how to fund the 2016
budget deficit.
The visit is now a fait accompli, yet
the aftermath is still generating a lot of controversies: should the $6
billion Chinese loan be taken or not, especially in light of the
conditionality attached to it? China has subjected the granting of the
loan to Nigeria’s readiness not to have any dealing with Taiwan. Apart
from this, Nigeria can access the loan without any further requirement
of negotiation and agreement.
In this regard, to what extent is the
deal beneficial to Nigeria or mutually beneficial to both countries? To
what extent did the visit help to further consolidate the goodness in
the relationship? It is useful to note that the foundation of
Nigeria-China relationship was not strong. When, for example, the
Chinese Premier, Zhou En-lai, embarked on a tour of ten (10) African
countries in the later part of 1963, Nigeria was excluded from the list
of countries visited. Probably for reasons of reciprocity, Nigeria
didn’t receive the visiting Chinese delegation to Nigeria in 1964
warmly, showing no disposition for an alliance with the communist
nation. Nigeria did not show favourable disposition to an alliance with
the communist nation. Again, probably as a result, thereafter, China
also excluded Nigeria from the infrastructural assistance she provided
to other African countries at that time. Thus relations between both
countries at that time were not only minimal but also largely predicated
on little regard for one another.
However, the misunderstanding was later
removed, thanks to some centrifugal dynamics, to the extent that the
relationship has moved from ordinary cooperation up to that of strategic
partnership. In this regard, in whose benefit has the bilateral
relationship been or who is benefiting more than the other in the
relationship? In fact, what is the nature of the relationship? Is it
exploitative in character? In which way is it different from Nigeria’s
bilateral relationship with any of Nigeria’s traditional allies? In
attempting some explanations to the foregoing questions, it is useful to
explicate, briefly, the main dynamics of the relationship on the one
hand, and Sino-Nigerian foreign policies, on the other. The two analyses
will enable the provision of an analytical background to PMB’s visit to
China, assist in determining whether the visit is worth it, as well as
help to determine the possible foreign policy directions of the two
countries.
Issues in PMB’s State
Visit to China
Three main issues were raised before and following PMB’s visit to China. Before the
visit, many observers considered that
Mr. President’s many foreign trips as too frequent, frivolous and of no
benefit, but this will not warrant attention here. However, even though
the trips generated much debate, PMB’s visit to China led to the signing
of some agreements which have raised the issues of offer of assistance
and loan, on the one hand, as well as the issue of Currency Swap, on the
other.
Offer of Assistance and Loan
On Wednesday, 13th April, 2016, Chinese
President, Xi Jinping, offered Nigeria a $15 million agricultural
assistance for the establishment of fifty demonstration farms across the
country. The President and Chief Executive of the Dangote Group, Aliko
Dangote, the Chairman of the Industrial and Commercial Bank of China
(ICBC), Mr. Jianqing and the Chairman of China Export and Credit
Insurance Corporation (SINOSURE), Mr. Wang Yi signed a $2 billion loan
from the Industrial Commercial Bank of China Limited for two cement
plants in Beijing.
China granted Nigeria a loan of $6
billion for infrastructural development, accessibility to which is
subject to two main conditions: identification of projects for which the
funds would be expended; and no official dealings with Taiwan. This was
followed by the signing of an agreement meant to establish one of the
biggest granite and processing plants in Africa. In this regard,
Shanghai Machinery Company Limited and Nigeria’s Marble Limited signed
an MOU to establish plants for assembling mining equipment and to
support capacity-building for the industry.
The loan has not only raised many issues
but has also attracted proponents and opponents. Some Nigerians have
opposed the loan, arguing that Nigeria is again being brought to the
path of deepening indebtedness. For instance, former President of the
Nigerian Bar Association, Mr. Olisa Agbakoba, SAN, has expressed much
concern about the agreements, especially in terms of their legal
framework. As he expressed it: ‘I’am concerned that such a complicated
process was finished in one week. I’m concerned about what legal
framework was used because in international trade, there are two
frameworks: multilateral, under the WTO, which this is not, or bilateral
investment negotiations. So I don’t know if this is bilateral
investment or simply bilateral trade. These are very important
clarifications because they carry different consequences.’
Senator Florence Ita-Giwa, former
Presidential Adviser on National Assembly Matters, has advised PMB to
tread cautiously when dealing with bilateral trade and strategic
cooperation with the People’s Republic of China. As she put it,
‘inasmuch as President Buhari is consolidating the bilateral relation
that exists between the two countries, I want him to take a firm stand
in the areas of quality. Nigeria should not be a dumping site for fake
and sub-standard products. The best way to tackle this is to create
dynamic quality control units.’
Dr. Ayodele Fayose, the Governor of
Ekiti State, is not only strongly opposed to PMB’s visit to China, but
has actually written a letter to the President Xi Jinpin of China,
requesting that no loan should be given to the Government of PMB. The
letter, in itself, has generated a new controversy. The ruling party,
All Progressives congress (APC), has condemned the $2 billion loan
request by the Federal Government of Nigeria and considered Governor
Fayose’s letter as a ‘seditious conduct that must not go unchallenged.’
Taiwo Olatunbosun, the Public Secretary of the APC, says ‘even though
Fayose has the right to entertain himself being a jester as he has
always been, this should not be taken to the extent of constituting a
security risk to the Federal Government.’
As also noted by Adeleye Akintola, the
General Secretary of the Asiwaju Grassroots Foundation (AGF), ‘the
recent outburst and action of the Governor is a violation against
Nigeria and its people. The Governor’s letter is an affront and a
sabotage that can only be compared with staging a coup against the
country.’
Governor Fayose’s reaction, describing
his critics as hypocrites, is noteworthy. He did not see any wrong doing
in his action because ‘it is on record that APC wrote to the United
States not to sell arms to Nigeria, reported the country to the European
Union, United Nations, and went to the bizarre extent of reporting the
then Chief of Army Staff, Azubuike Iherijika to the International
Criminal Court.’ He noted further that ‘on one occasion, a certain APC
stalwart insinuated that Jonathan’s visit to Chad was to plan further
attacks on the North.’
Consequently, Governor Fayose not only
gave reasons as to why China should not grant any loan to Nigeria but
also asked why a loan should be taken. In his words, ‘with the $200
billion they claimed is coming from the United Arab Emirates, $700
million raw cash they said was found in Diezani Allison-Madueke’s house,
N3 trillion said to have been saved from the Treasury Single Account
(TSA), and N4.5 trillion the Federal Inland Revenue Service (FIRS) said
it will generate this year, what then is the rationale behind the
Federal Government seeking any loan?’
Senator Ben Murray-Bruce has argued in
the same vein, suggesting that Nigeria should not increase her
indebtedness but should seek other avenues for revenue generation. He
suggested that Nigerians in Diaspora constitute a good source as they
are currently the single largest source of foreign direct investments to
Nigeria. He noted that in 2015, more than US $20 billion was injected
into the Nigerian economy by the Nigerian Diaspora. Besides, policies
that would reduce, if not eliminate completely fraud and risks, should
be adopted by the Central Bank of Nigeria, and, above all, even though
loan taking has merits, there is still the need for Government to ‘think
creatively.’
The issue of the loan to be taken from
the Industrial and Commercial Bank of China (ICBC) was also raised. It
is argued that the loan agreement was not done with the Chinese Central
Bank or Government of China directly. In other words, the ICBC is not
owned by the Government of China. This is true but there is nothing to
suggest that the loan can be detrimental to Nigeria’s interest or
inhibit Nigeria’s capacity to meaningfully take advantage of it because
of the private character of the creditor. For as long as the ICBC has
the support of the Chinese government, the loan is in order. However,
where the critics of the loan may be right is in the area of conditions
of the loan which have not been made known to the public. It is
necessary for this to be made known for the purposes of transparency.
Currency Swap
Additionally, the Nigeria-China currency
swap deal is another issue currently generating controversies in the
print and electronic media. Currency swap is an arrangement by which
countries facing foreign currency liquidity challenges agree to trade in
their own local currencies, at a negotiated and pre-determined rates of
exchange without the use of a third currency. As noted by Joseph
Uwaleke, there has been an increasing currency swaps agreements by
Central Banks, following the financial crisis of 2008. The currency swap
agreements generally are done for three years and are meant to
stabilise the international financial market as well as facilitate
bilateral trade and investment.
Like the case of the loan from the ICBC,
the currency swap agreement is still shrouded in secrecy. There is no
information on the size, duration, cost and effective date of the swap.
Besides, the Foreign Minister reportedly had said that there was no
currency swap between Nigeria and China contrary to many other reports.
However, according to Lin Songtian, Director General of the African
Affairs Department of the Ministry of Foreign Affairs in Beijing, the
currency swap ‘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.’
In the same vein, Mr. Godwin Ifeanyi
Emefiele, Governor General of the Central Bank of Nigeria, has explained
that ‘the agreement on the currency swap with China will definitely
benefit Nigeria because the essence of the mandate is to ensure that
Nigeria is designated as the trading hub with China in the West African
sub-region for people who want the renminbi as a currency denomination.’
He noted further that ‘using the renminbi will improve trade with
China, as this will encourage importers to open Letters of Credit in the
Chinese currency for the importation of raw materials, equipment and
machinery from China, rather than other trading regions, so the
agreement will encourage trade between countries.’
Johnson Chukwu, Chief Executive of the
Cowry Asset Management Limited, a Nigerian Financial Advisory and
Research Firm, also has it that ‘about 22% of Nigeria’s exports will be
settled in the Yuan instead of the US dollar, which will relieve the
country of much pressure on foreign reserves at this time.’
Concluding question:
In whose larger benefit
is the relationship?
We believe, and strongly too, that the
present state of Nigeria-China relations, and particularly PMB’s visit
to China is mutually benefitting. At the level of China, the Chinese are
seeking to assert themselves as a global power. They want to grow their
economy. They want their currency, the Yuan, to have the same
international value and impact in international financial relations.
Nigeria is internationally recognized as a terra cognita for profitable
business and genuine and honest business investors. China is therefore
much interested in Nigeria. Without doubt, the Chinese are also actually
indirectly challenging the domination of the US dollar and leadership
in global affairs.
At the level of Nigeria, there is the
need to fund the 2016 budget deficit of about $11.1 billion. The
financial outlay is about $30 billion out of which $13 billion is for
recurrent and $9 billion is for capital. How should this challenge be
addressed? In this regard, Nigeria reckons with the fact that China
currently accounts for about 22% of total importations from Nigeria but
only 2% of Nigeria’s total global imports. China is seen as a possible
strategic source of alternative funding, as well as a source of tension
reducing at the level of foreign exchange liquidity challenge in terms
of access.
This is why PMB’s visit to China is
currently adjudged as the best of all his foreign visits to date for
obvious reasons. First, as noted earlier, China has offered a credit
line facility of US $6billion on preliminary two conditions:
articulation of projects for which the loan is to be expended and no
official dealings with Taiwan. We talk about preliminary conditions for
now because tomorrow is difficult to predict. On the issue of projects,
it is agreed that the funding will be largely for transport
infrastructural development: railway, airport, road, etc. There can be
no problem in articulating Nigeria’s priorities at this level.
Regarding the conditionality of ‘no
dealing with Taiwan’, this is at best irrelevant because Nigeria has
been supporting Beijing on its policy of ‘One China, Two Systems” since
the inception of the policy in the 1970s. This was why Nigeria promptly
accepted the change of status of Hong Kong, initially regarded as a
trading post, to that of ‘Consulate General when it was returned to
China in 1997.
China has also offered $15 million for
agricultural development assistance. The gains of this development
assistance cannot but first be for Nigerians and for the Chinese later.
They will come back to reap part of what they would have sown.
Agreements were done in the same vein in the areas of civil-military
partnership, trade and investment, aviation, and scientific and
technological cooperation. All these agreements are nothing more than
intended investments that are expected to yield positive results in the
near future.
In the eyes of the general public, the
deepening of relations with China, though coming late is still a most
welcome development.
In conclusion therefore, it can be
rightly posited and submitted that, as at today, the relationship is
more benefitting to the Chinese but in the long run, there is no way it
will not be more benefitting to Nigerians. The extent to which Nigeria
and China will not forge a formidable alliance contrary to China’s
foreign policy on the matter is a matter of speculation. Time will tell.
The same is also true of Nigeria’s sovereign right to decide to form an
alliance with China. The truth is that, for now, it is very difficult
for Nigeria as a sovereign state to breathe well on the basis of how
Western countries relate with Nigeria in the area development politics.
It should be recalled that PMB made it
clear in China that he would honour all the obligations required in the
agreements signed by his predecessors. The implication of this is
renewal of commitment and seriousness which can only ginger the Chinese
to reciprocate. Consequently, PMB’s visit to China is a consolidation
visit, a follow-up visit meant to renew the seriousness of purpose of
the Government of Nigeria. Contrary to some suggestions, it is not a
radical shift from the values of westernisation to socialism, cordial
relationship is to make the traditional partners see more clearly before
the rain is gone (to borrow from Johnny Nash) that Nigeria cannot
continue with the current international economic order to her own
detriment.
The summary of Nigeria’s relations with,
and PMB’s visit to, China and is nothing more than ‘making new friends,
but keeping the old, for one is silver, the other is gold.’ On this
basis, and in a Gowonian style, ‘no victor’, ‘no vanquished’ but
potential winners and winners if the Government of and people of Nigeria
will not allow the good opportunity provided by the commitment and
goodwill of PMB to permanently nip institutional corruption and
mismanagement of scarce resources in the bud in Nigeria. But so far, it
is a win-win situation.
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