Opinion: Who’s in charge, China or Nigeria?

WASHINGTON — For some, the rapid growth of China’s presence in Africa has been disquieting.

Beijing is not always helpful where it has political influence. It occasionally colludes with corrupt and abusive governments, and its thirst for natural resources has raised the specter of a second “scramble for Africa.”

In Nigeria, Chinese economic and political influence, however, is a chimera. It peaked under President Olusegun Obasanjo, from 1999 to 2007, and then rapidly dissipated during the subsequent Umaru Musa Yar’Adua years.

The relationship has occasionally produced benefits for both sides, though often generating more media attention than actual substance. For example, media excitement over the May announcement of China’s intent to build refineries ignores a pattern of failure to implement such deals.

Post-independence in 1960, Chinese trade and investment in Nigeria were negligible, though Hong Kong and Taiwanese entrepreneurs had established a manufacturing presence, especially in textiles.

However, during the Obasanjo administration, the value of Nigeria-China trade increased dramatically, particularly near the end of his administration. The value of trade between the two countries grew from more than $3 billion in 2006 to more than $7 billion in 2008. (By comparison, the value of U.S.-Nigeria bilateral trade was more than $42 billion in 2008).

Nigeria sold oil to China (its only export), although not very much, and purchased cheap manufactured goods, with the balance of payments strongly in favor of the Chinese. According to the World Bank, only 3 percent of the oil Beijing imported from Africa originated from Nigeria, the continent’s biggest producer.

Despite China’s escalating energy requirements, its attempts to expand its energy relationship with Nigeria has largely failed. Obasanjo, seeking an alternative to the big Western oil companies, sought to secure Chinese investment in big infrastructure projects in return for oil block concessions he would grant on highly favorable terms, known as “oil for infrastructure” projects.

During Obasanjo's second term, China's President Hu Jintao and Prime Minister Wen Jiabao each visited Nigeria, and Obasanjo went twice to Beijing. Both sides made numerous dramatic announcements, including promises that the Chinese would rebuild the railway system and construct power plants and refineries.

However, these agreements lacked transparency and were short on details. There are also credible charges that negotiations were heavily greased by Chinese bribes and other forms of corruption. A Chatham House report makes a strong, if circumstantial, case that Obasanjo sought Chinese money for his attempt to change the constitution and secure a third presidential term through bribery.

Obasanjo ultimately failed and in 2007 was succeeded by his handpicked successor, a Muslim from northern Nigeria, Yar’Adua. The new administration canceled or suspended most of Obasanjo’s “oil for infrastructure” contracts, which from its perspective strongly favored the former president and his political allies.

In the aftermath, China has begun to seek opportunities to acquire shares in established oil producing companies well-versed in navigating the tricky Nigerian oil industry. Hence, in 2009, the China Petroleum and Chemical Corporation, also known as Sinopec, purchased Canada’s Addax Petroleum, one of West Africa’s largest independent oil producers, for $7.2 billion.

Chinese direct investment in other sectors has had some success. Chinese construction companies are active in Nigeria infrastructure projects, and the Chinese have investments in manufacturing, telecommunications, power and transport.

As China’s trade and investment increased, so too has its resident population in Nigeria. The Chinese in Nigeria numbered an estimated 45,000 in 2007, up from 8,300 in 1993. By comparison, estimates of the number of American citizens resident in Nigeria are about 20,000 with a significant percentage being the American-born children of Nigerian nationals. Many of the resident Chinese are involved in small enterprises. For example, by 2007, Chinese restaurants were ubiquitous, and among the elites, “going out to eat Chinese” was a celebratory event.

Nevertheless, Nigerian and Chinese business practices remain far apart. For example, Nigerian complaints abound about the Chinese being “racist,” and rarely use Nigerians for managerial positions. They are notorious for paying low wages for indigenous labor. Nigerians also accuse the Chinese of dumping products of inferior quality and of destroying the indigenous Nigerian textile industry through smuggling in connivance with corrupt Nigerian officials.

The Chinese respond that the Nigerian market, characterized by poverty, demands cheap goods. The collapse of the textile industry in the north, however, probably owes more to the failure of the power sector than to Chinese competition.

While Yar’Adua’s review of Obasanjo’s dealings may have been motivated by self-interest, it highlighted the Nigerian lack of transparency with respect to infrastructure reconstruction and oil and gas investment, and the impact of domestic political rivalries.

Goodluck Jonathan, who assumed the presidency after Yar’Adua’s death in May, is close politically to Obasanjo. According to a Chinese diplomat, Obasanjo retains substantial personal business interests in China. He may advise Jonathan to revisit “oil for infrastructure” should the latter be elected in 2011. In any event, any Chinese economic role in Nigeria is constrained by specifically Nigerian political and economic realities. Abuja, not Beijing, is in the driver’s seat.

John Campbell is the Ralph Bunche senior fellow for Africa policy studies at the Council on Foreign Relations. From 1975 to 2007, Campbell served as a U.S. Department of State Foreign Service officer. He served twice in Nigeria.