Nigeria – China trade not a win-win deal – MAN

The Manufacturers Association of Nigeria (MAN), has said the trade relations between Nigeria and China is not a win-win situation and its negative implications for the Nigerian manufacturing sector cannot be overemphasised.

In a report signed by the Director-General, of MAN Segun Ajayi-Kadir, disclosed that there is an obvious trade imbalance against Nigeria, resulting from the huge Chinese exports to Nigeria. 

“The trade imbalance notwithstanding, Nigeria has benefitted, to some extent, from Chinese investments in Nigeria. 

“It should be noted that China emerged as a world super-power as a result of its protectionist measures in critical sectors of the economy such as healthcare, insurance, manufacturing, financial institutions and ICT.

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“It is therefore of utmost importance that the Federal Government should always consider the interest of the country while entering into any trade agreement, bi-lateral or multilateral. The report explained that “For the Nigerian manufacturing the sector to benefit from Nigeria-China relations, there is the need for both countries to work in concert to encourage joint ventures, franchise model, contract manufacturing arrangement, develop strategies to address the issues of dumping of sub-standard and counterfeit products into the Nigerian market, institute a conflict resolution  framework to settle trade disputes and protect Nigerian manufacturers against unfair competition.”

According to the report, “China’s trade surge into Nigeria has been partly responsible for the low capacity utilization and low productivity experienced by Nigerian manufacturing companies. (massive influx of cheap & substandard products).” “The first major casualty was the textile manufacturing sector. The closure of textile factories in Kano, Kaduna, Lagos, Aba and other parts of the country, as well as factories in other sectors, has led to massive job losses with Its poverty escalation implications.”
“Chinese companies enjoy a low cost of production, considering their large scale production system and availability of sound supportive infrastructure, unlike what obtains in Nigeria.”

“Chinese manufacturers enjoy institutional support, including long-term loans at single-digit interest rates, in contrast to what obtains in Nigeria, where interest rate averages 28 per cent.

“Chinese businessmen bring their products into Nigeria, act as the bulk-breakers and even retail the products in Nigerian markets as can be seen at the Kano textile market. Retail outlets of Chinese products (called China Villages) are also constructed conspicuously in many parts of the country.” “Furthermore, production for export is highly subsidized in China, as against Nigeria, where the Export Expansion Grant policy approved for manufactured exports were suspended in 2014 (though recently lifted in 2017) with meagre support.”
The report explained further that the government should  encourage more Chinese direct investments inflow into manufacturing in order to reduce the serious trade imbalance and provide more jobs for Nigerians.

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“In this regard, China should be encouraged to set up more production facilities in Nigeria, especially for big-ticket imported manufactured products.”

“Emulate China in terms of building human and physical infrastructure, granting manufacturers access to cheap credits and technologically advanced production systems.”

“Adopt stronger anti-dumping policies against sub-standard goods from foreign companies and enhance the effectiveness of its regulatory agencies such SON, NAFDAC, etc.”