For years, Chinese presence in Nigeria has been felt in numerous sectors of the nation’s economy. Indeed, China and Nigeria have extensive economic ties covering many sectors like construction, retailing, manufacturing, education services, technology, clothing and oil production.
The bilateral trading relationship between the two nations dates back to 1972 when the Chinese minister of foreign trade and economic co-operation visited Nigeria. During the visit, the minister led the Chinese government to enter a trading agreement with Nigeria. Since then, trading activities between the partner nations have boomed.
While popular opinion holds that the relationship between Nigeria and China have blessed both nations in appropriate measure, sceptics believe that the relationship between the duo has been a difficult and slippery one, owing to the terms of the contract between China and Nigeria, as well as the characteristic of the business and political environment in Nigeria.
The Chinese nation has been involved with the steel projects in Nigeria’s Ajaokuta and Aladja, and the national railway projects cutting across the country. The oil drilling projects in the Niger Delta region of Nigeria is also home to Chinese exploration and investments. Cynics have argued all these projects to have a little real impact on the Nigerian economy, given the attendant corrupt and shoddy practices, which dampen the expected effects of these investments.
Regardless, China aims to broaden its tentacles, once more, as it eyes a sparsely tapped sector of Chinese engagement.
According to the Chinese ambassador to Nigeria, Cui Jianchin, during the 2021 Chinese Moon Festival commemoration and China-Nigeria Cultural week, China hopes to enter the Nigerian banking sector.
The ambassador made it clear that China is in talks with Chinese-owned banks to operate banks in Nigeria. According to him, establishing Chinese banks in Nigeria will serve as a booster to the nation’s currently wobbling economy.
Jianchin has boasted that six out of the world’s best banks are Chinese-owned. He assures that opening the sector to Chinese bankers will usher in core changes in the way banking is done in Nigeria. He believes that it will eventually feed into improved industrial growth in the country.
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While Jianchin informed journalists that feasibility studies were already underway, he also affirms that the joint co-operation will help boost Nigeria’s economy and expand trade relations between the two countries.
China and Nigeria have a track record of bilateral trade volume with each other. In 2009, Nigeria was reported to be fourth among the top two Chinese trading partners in Africa after Angola, South Africa and Sudan. Also, Nigeria is praised for ranking second among the top African importers from China, after South Africa.
In 2020, for instance, Nigeria-China trade volume was reported to be near $20 billion, which is $800 million more than the previous year’s trade record of $19.2 billion.
It is believed that Chinese involvement in Nigeria’s buoyant financial sector through commercial banking will further the cause of financial development and improved banking activities in the country.
In this new future relationship, Nigeria is expected to benefit from China’s position as a major political and economic gigantism that can positively complement Nigeria’s long-awaited hunger for economic diversification and political pluralism. To China, it is expected that the Asian giant will benefit from Nigeria’s attractive and huge market.
Before now, however, Chinese authorities have neared an international commercial banking relationship with Nigeria although, on a reasonably small scale. This, they did through remote sponsorship of development activities in Nigeria by Chinese banks and links between Nigeria and China’s commercial banks.
Also, in 2018, China attempted to permeate Nigeria’s financial market through a currency swap agreement with authorities to help finance trade and investment between both trading partners. This arrangement was to aid international transactions between China and Nigeria by removing the need for the US dollar intermediating between the naira-yuan conversion.
The three-year tenured deal was set to allow a swap up to a maximum of $15 billion for N720 million between the Central Bank of Nigeria (CBN) and the People’s Bank of China (PBC). This swap arrangement never saw the light of the day to date.
However, this new expected development between the two regional economic giants is coming when both countries have resolved to launch their own central bank digital currencies (CBDCs) in place of the cryptocurrency. While Nigeria is on the verge of the e-Naira launch, China has reached the final testing stages of the e-yuan issuance and administration.
It is hoped that the Chinese bank establishment in Nigeria alongside the use of the CBDCs will help both countries host dollar-free transactions as they swap digital currencies during their trading activities.
Also, China can explore the possibility of ushering into Nigeria a new and more globally relevant bank system structure by investing in currently weak banks while exploring partnerships with existing stronger banks.
Optimists of this expected investment believe that the relationship will further improve technological adoption in the banking system and increase employment.
