Nigeria in the America-China web

In April 2016, the Central Bank of Nigeria purportedly signed an agreement with the China Industrial and Commercial Bank of China (ICBC) to allow renminbi transactions among Nigerian banks and the inclusion of the Chinese currency in Nigeria’s foreign exchange reserves. After the announcement, nothing came out of the agreement and we thought the deal was dead.

However, just a few days after President Buhari met with the US President, Donald Trump, at the White House and signed some business deals that will allow for more trade between the United States and Nigeria, the deal came right back and the CBN again announced that it has signed a currency-swap agreement worth $2.5 billion to boost commercial ties with China by providing adequate local currency liquidity to Nigerian and Chinese industrialists and reduce the need to use dollar in their bilateral trade. The deal, according to informed sources, will also help to improve the speed, convenience and volume of transactions between the two countries.

Nigeria appears to be benefitting from the current trade dispute between the United States of America and China. Since coming to power, President Trump has triggered a trade conflict with China in a bid to reduce America’s huge trade deficit with China. In January, the Trump administration increased tariffs on imports of solar panels and dishwashers from China. He followed it up with further increases in tariffs for steel and aluminium in March. China has also retaliated and both sides have been issuing series of threats with Trump more vociferous and determined to win the trade war between them.

Just like during the cold war, Trump has quickly externalised the conflict, seeking allies and trying to play catch-up to China especially in Africa where the US had hitherto been reluctant in establishing a strong trade presence. The invitation to President Buhari therefore must be seen as the beginning of the Africa phase of the ongoing trade dispute with China. The “United States is currently working to expand trade and commercial ties with African nations, including Nigeria, he said at a joint press conference with the visiting Nigerian leader at the White House. “We hope to be the economic partner of choice for nations across the continent and all around the world.”

Ignoring the damning human rights reports on Nigeria released by the US States Department just days to the meeting that, going by tradition, would have severely limited American trade and assistance to Nigeria, Trump was more focused on trade with Nigeria and catching up on lost grounds. Immediately after the meeting, Trump announced that his administration has started talking with President Buhari “about taking down the trade barriers” impeding the United States’ trade with Nigeria. Trump did acknowledge that Nigeria is one of the United States’ largest trading partners in Africa but still wants Nigeria to rip “down those trade barriers” to pave way for “growing our trade relationship on a principle of fairness and reciprocity.”

It is not all appeals though and in his characteristic manner, Trump tried to apply the pressure suggesting that giving Nigeria “well over one billion dollars in aid every year” should entitle the US to a privileged trade status with Nigeria, adding with finality “we think we are owed that.”

For African countries and Nigeria especially, the intercourse with China has been beneficial. Over the last fifteen years, China has poured huge resources into large scale infrastructure projects in most part of Africa. It has financed and built rail projects, roads, airports, stadiums and other capital intensive projects – projects for which either Western and particularly American companies lack the requisite risk appetite for or charge prohibitive and exorbitant prices for.

Although the Chinese buys mainly commodities from Africa, recently Chinese companies are beginning to diversify their interests into other sectors such as telecoms where they are the leading suppliers of phones and equipments to Africa. Crucially also, Chinese companies are now helping African countries to expand their manufacturing base. For example, Chinese shoe manufacturers have invested hugely in Ethiopia’s footwear industry, creating more than 4,000 dignifying jobs and exported over $18 million worth of footwear in 2014, according to the Financial Times.

The businessman in Trump has seen all the huge trade potentials in Africa and is ready to wrestle with China to grab them.

But as our leaders and policy makers clink their glasses in celebration for being able to attract both the Chinese and Americans, we must remind them that they need to be careful and mindful of the kinds of deals they reach with these two super powers competing for power and influence around the world. We must be certain of the benefits that we will derive from those deals and be careful not to be caught in the web of the super-power fight.