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Is China’s investment in Africa good for the Nigerian economy?

Joseph Nnanna (Division of Business Administration, Northwestern Oklahoma State University, Alva, Oklahoma)

Journal of Chinese Economic and Foreign Trade Studies

ISSN: 1754-4408

Article publication date: 2 February 2015

Abstract

Purpose

The aim of this paper is to assess the impact of China’s trade agreement and foreign direct investment (FDI) flows to Nigeria with special reference to the manufacturing sector utilizing the following key economic performance indicators: inflation, unemployment, income and gross domestic product, to name a few. Since the turn of the millennium, China has enjoyed a substantial presence in the African continent. In fact, the country has signed bilateral agreements with Angola, South Africa and Sudan to name a few. Recently, China established its West African trade hub in Lagos, the economic capital of Nigeria, to be strategically positioned. The results of the study revealed conclusively that although China’s investments over the years have benefited the Nigerian economy and its various firms in the manufacturing sector, the agreement signed by both countries ultimately needs to be reexamined to ensure equity.

Design/methodology/approach

To thoroughly analyze the effects of China’s investments in Nigeria, this study was carried out in two phases. The first analysis of this study is anchored on a “before/after” framework based on descriptive statistical analysis of the selected economic performance indicators chosen from selected cross-national data. Accordingly, the time frame for this study runs from 1993-2012 which roughly corresponds to the era when China commenced significant investments in Nigeria. Second, employees, policymakers and individuals in the manufacturing/textile industries were interviewed. Furthermore, participation from federal as well as local government agency staff members was solicited using the Delphi technique.

Findings

Empirically, the results conclusively reveal China’s dominance in the manufacturing and textile sectors in Nigeria. In other words, at face value, China’s investments are ultimately good for the Nigerian economy. However, at a micro-level analysis, the researcher examined the human factor, that is, the families of former and current employees, abandoned businesses/factories and a decaying textile industry that was once vibrant.

Originality/value

To the knowledge of the researcher, this is the first study attempting to assess the impact of the rise of China on the Nigerian economy by combining key economic performance indicator in tandem with face-to-face interviews and the Delphi technique.

Keywords

Citation

Nnanna, J. (2015), "Is China’s investment in Africa good for the Nigerian economy?", Journal of Chinese Economic and Foreign Trade Studies, Vol. 8 No. 1, pp. 40-48. https://doi.org/10.1108/JCEFTS-09-2014-0020

Publisher

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Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited