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

Jan 29, 2013 4:39pm by Peter Vanham

http://blogs.ft.com/beyond-brics/2013/01/29/nigeria-to-china-we-want-up-the-chain/#axzz2JZAX9t00




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.

Wow, I was expecting Front Page for this piece..

Guess I should have posted about Tonto Dike instead. smh!!

^^^^

But seriously though, Sanusi nailed it. It is imperative that we begin to position ourselves as an emerging manufacturing hub, seeing that Chinese wages are on the rise and their labour force is shrinking.

Several challenges remain, however. The massive corruption in government is a serious disincentive for genuine business activity (ask Richard Branson if in doubt), the power sector isn't in full gear yet, the railway sector is still a government monopoly, our legal system remains slow and inefficient with archaic laws, we still lack key manpower in several highly technical industries, our security situation is still fragile, transport networks are still substandard and of course there are still the problems of frequent policy somersaults and multiple taxation.

Nigeria holds a lot of promise. Over time we will clean up our act and get things right. If only we had the right leadership, our transformation would have come quicker. Right now government just needs to get its act together, entrench the rule of law, ensure strong and functional institutions, and create the right environment for business to thrive. These bottlenecks need to be cleared before we can fulfil our potential.