• Chinese, Nigerian presidents satisfied with bilateral ties • Pang Yuliang Acquired German Parchim Airport

Investing in Energy
Chinese state-controlled oil company CNOOC Ltd. paid $2.3 billion for a 45 percent stake in a Nigerian oil field in its first major investment since its failed bid to take over Unocal Corp. last year.
The deal, according to reports, added to a multi billion-dollar string of foreign acquisitions by Chinese oil companies, which are aggressively pursuing energy supplies to fuel China's booming economy. The agreement, which requires approval from the Nigerian and Chinese governments, covers a deep-water area of the oil-rich Niger Delta region, CNOOC said. It said the area includes the Akpo oil field discovered in 2000 and three other "significant discoveries."
Another contender for the Nigerian field was India's biggest oil company, state-owned Oil & Natural Gas Corp., which submitted a winning $2 billion bid last month. But the Indian cabinet blocked that deal, contending it wasn't commercially viable.
China imports more than 40 percent of its estimated daily consumption of 6 million barrels of oil, and that proportion is expected to grow amid surging economic growth, according to foreign analysts. China became a net oil importer for the first time in the 1990s after meeting its needs for decades from domestic supplies, and is now one of the world's top consumers of foreign oil.
Between China and Nigerian Railway
China has invested in the Nigerian transport sector, in a deal to help the Nigerian government put back on track the country's foundering railway system. China's offer of a grant and expertise comes after the formulation of a 25-year comprehensive railway development plan that includes redesign of the existing railway tracks and expansion of the lines to new areas across Nigeria.
In October 2006, the government signed a 2.5 billion US dollar loan facility with China, a substantial part of which will be used to finance the refurbishment of the railway system.
In all, an estimated 7,800 kilometres of standard gauge railway network, to connect all 36 state capitals and major cities in the country, will be built by concession-holders, which then will be responsible for infrastructure upgrades, expansion and maintenance, and train operations.
The CCECC is handling the first phase of the project, put at 8.3 billion dollars. Some of the phases will be financed through private investors over a period of time. The entire railway modernisation and expansion project is estimated to cost over 30 billion dollars.
A consortium of international and domestic private investors and banks have already come together to offer 1.4 billion dollars over 10 years for the development of rail infrastructure and services. The contract for the first phase covering 1,315 km of double-track, standard gauge line (1,435mm) from the commercial centre of Lagos in the southwest to Kano in the north (with a branch from Minna (central Nigeria) to Abuja, Nigeria's capital) was signed Oct. 30, 2006 by Nigeria and the CCECC.
The railway modernisation and expansion project will be operated and managed as a private sector organisation and will be able to run 36 trains per day, from Lagos to Kano and back -- and move about 40 million tonnes of goods per year. Currently, the Nigerian Railway Corporation (NRC) is fully owned by the Nigerian government.
A Word for the Wise
African governments have opened their doors widely to Chinese investors mainly on the basis of trust and hope. They expect their relationship to be mutually beneficial in both the short and long term, unlike Africa's relationship with the West. Chinese involvement, especially in troubled areas of Africa, should not only be seen as transparent but should help ensure peace on the continent.
Africa must not rely on external investment from China through selling its oil. Despite the dangers of a new imperialism, China might still provide an opportunity for Africa which Europe and the US have simply failed to deliver.
It is not to say that there are no business men or manufacturers in China who produce sub-standard goods and cut corners to maximise profit. The Chinese are dealing with this problem and one hopes that Nigerian custom and destination inspection officials will do the same.
However, the Nigerian businessmen should be patriotic enough to shun patronising sub-standard goods either from China or elsewhere for the good of Nigerians; with this Nigeria cannot be a dumping ground.
Document AFNWS00020070228e32s000cw
This Day (Nigeria) - AAGM: Chinese Investment in Nigeria - What Motives?
Abimbola Akosile

2,589 words

27 February 2007

This Day (Nigeria)

AIWTHD

English

The Financial Times Limited. Asia Africa Intelligence Wire. All material subject to copyright. This Day (Nigeria) (c) 2007 All rights reserved
Here comes a 'giant'
China has 56 ethnic groups with an estimated total population of about 1.1 billion people, compared to Nigeria's contended 140 million citizens. Its major tribe is the Han, while the other 55 ethnic minority groups share about 100 million people spread throughout the country.
China's exports in 2006 rose 27.2 percent from the previous year to $969 billion, while imports were up 20 percent to $791.5 billion. The country's global trade surplus for 2005 was $102 billion. The United States trade gap with China was expected to pass 2005's record $202 billion. China's global surplus is smaller than that with the United States because it runs a deficit with other countries.
The country raised the yuan's value against the dollar by 2.1 percent in July 2005 and has let it gradually climb by about 3.8 percent since then in tightly controlled trading.
China also was a net auto exporter in 2006 for the second straight year, It also said exports doubled last year to 300,000 units, while imports rose 41 percent to 229,000 units.
Recently, Beijing hosted a summit for 48 African leaders, where top officials offered $5 billion in loans and credit to Africa along with a doubling of aid.
Trade between China and Africa reached $55.5 billion last year, up 40% from the previous year and a 10-fold increase from a decade ago, while accumulated direct Chinese investment in the continent reached $6.6 billion. China's rapid economic growth, reported to be 10.7% in 2006, has brought the nation to Africa's attractive resources. China began to open up its economy in the late 1970's when it moved from a centrally planned economy to a market-oriented economy; it decentralized trade, slashed tariffs, unified the dual exchange rates in 1994, and removed exchange controls on current transactions in 1996. These actions, together with other reforms, triggered the rapid expansion of China's investments in other countries, as well as foreign investment into China.
Many African countries welcome investments by the Chinese-who do not attach conditions such as guarantees of transparency or good governance to their projects. Some human rights activists say they worry that China's policies could prevent Africa from democratizing. They also say that increase trades with China-which often floods African market with cheap finished goods-is bankrupting local manufacturers. China denies accusations by critics, who say its investments are comparable to European colonialism.
Local Dumping Ground
There is a growing debate and uneasy calm within the Nigeria's business circle over the invasion of Nigerian market by Chinese investors. On the one hand, it is seen as a blessing as China is an emerging power in the global scheme of things, on the other hand it is seen as dangerous and an attempt to further cripple the dwindling Nigerian economy.
President Olusegun Obasanjo has described China's investment drive in Nigeria as part of the overall reform of the national economy, so as to give the nation a fresh economic breeze, as well as to benefit from China's experience as an emerging super power.
China, experts say, is set to occupy the enviable world leadership position commensurate with its dynamic and huge population and its material achievement in all spheres. China is not interested in competition for world domination and colonialism but friendship and economic partnership which it hopes will ultimately benefit its less privileged partners.
The Nigerian government has put a lot of effort in cultivating good friendship with China in a drive for economic reform and Foreign Direct Investment (FDI). Several Chinese companies in construction, telecommunications, oil and gas, pharmaceuticals, etc., have thus invested billions of Naira in Nigeria, as a result.
According to Louis Okoroma, a Public Affairs Analyst, an important feature about China's growing interest and relationship with Nigeria is that our country's business landscape is widening and becoming more competitive among nations.
In the same vein, other countries are also working hard to break the Nigerian market thus making Nigeria, an important destination for international investment and finance. But one complaint by Nigerian investors is that Nigeria is fast becoming a dumping ground while indigenous companies are dying.
This criticism of China's economic present in Nigeria does not call for Nigeria's break up of its relations with the emerging power; all it calls for is common sense.
In Nigeria and other parts of Africa there is growing concern about many fake products coming from China and cases of dumping. Africa needs firm commitments from China to attack and stop this menace.
One also expects that in the long run the several hundred Chinese companies now operating in Africa will transfer their technical and managerial skills to African workers to enable them to take over the industries completely. This will ensure the credibility of China, strengthen cooperation, and enable China to move to greater heights and responsibilities.
Overseas Direct Investment
In 2004, China's non-financial direct investment overseas totaled $3.62 billion, up 27 percent over 2003. Of this total, equity investment was $2.506 billion, accounting for 69 percent, and reinvestment of profits amounted to $1.116 billion, accounting for 31 percent.
By the end of 2004, the accumulative amount of China's overseas direct investment had approached $37 billion. During the year, 829 Chinese-invested enterprises were established overseas, with approval of the Ministry of Commerce, involving $3.712 billion in contractual investment by Chinese companies.
China's overseas direct investment in Asia (concentrated in such countries and regions as Indonesia and Hong Kong) stood at $1.396 billion, accounting for 38.6 percent; in Europe (mainly in Germany and Russia), $308 million or 8.5 percent; in Africa (mainly in Nigeria, South Africa and Madagascar), $135 million or 3.7 percent; in North America (mainly in the United States), $62 million or 1.7 percent; and in Oceania (mainly in Australia), $48 million or 1.3 percent.
China's trade with Africa has risen four-fold in the past four years. It is now said to be $40bn. China has overtaken the UK to become Africa's third most important trading partner, after the US and France. Because its oil needs are expected to double in 15 years, China has invested in particular in Sudan, Angola and Nigeria.
The oil majors have shown that Africa need not be stable to make a profit. Nigeria and Equatorial Guinea demonstrate that oil brings in money, but it rarely benefits the 'masses'. Nigerian leaders have allegedly mis-spent roughly $400bn (from oil and aid money) in 40 years.
According to statistics from the US. Geological Survey (USGS), the principal mineral targets in Africa are diamond, PGMs and gold, but investment in other areas is rapidly growing.
Substantial capital expenditures were also likely for aluminium in Mozambique and South Africa, copper in Congo (Kinshasa) and Zambia, crude petroleum in Nigeria, Angola and Sudan, iron ore in Mauritania and Senegal, and natural gas in Nigeria. Additional investment in uranium, radium, low-cost thorium, chromium, titanium, tantalum, germanium and lithium are also expected.
History of Trade Ties
West Africa's enormous potential has made it a geopolitical battle-ground for natural resources between the US, China, India and other resource hungry countries, experts say.
China sought then to show that its rapidly expanding ties with Africa went beyond the oil and minerals that Beijing has been snapping up to fuel its economic boom.
As recently as February 19, China announced that it would lend African nations 1.5 billion pounds in preferential credit over three years and double aid and interest-free loans over the same time. According to reports, this is part of China's latest efforts to shower the continent with business and aid, but Africa's raw materials are widely regarded as the main prize, with the continent's energy resources believed to be high on the list of priorities.
China has faced criticism from Western aid groups that it encourages corruption and misrule by failing to demand accountability when giving aid, loans and investment.
In 2006, trade between China and Africa reached £27 billion, a jump of 40 per cent on the previous year and accumulated direct Chinese investment in the continent reached £3.3 billion.
So Many Promises
In addition, hundreds of African business people went for a two-day trade exhibit immediately following the summit, eager to explore new market outlets in the world's most populous country and one of its fastest-growing economies.
The summit approved a three-year action plan to forge a "new type of strategic partnership". The plan pledges that China will double aid to Africa by 2009 (to about $1-billion); set up a $5-billion China-Africa development fund to encourage Chinese companies to invest in Africa; provide $3-billion in preferential loans and $2-billion in preferential buyer's credits to African countries.
China also plans to cancel all debt stemming from Chinese interest-free government loans that matured by the end of 2005, for the 31 heavily indebted and least developed countries (LDCs) in Africa that have relations with China (an amount estimated at about $1,4-billion); further open its markets to exports from African LDCs by increasing from 190 to 440 the number of products receiving zero-tariff treatment.
The economic super-power also pledged to train 15,000 African professionals, double the number of Chinese government scholarships given yearly to Africans (to 4,000) and send 100 senior agricultural experts and 300 youth volunteers; and build 30 hospitals, 30 malaria-treatment centres and 100 rural schools.
China also vowed to support the African Union, including by building a new convention centre at the AU headquarters in Addis Ababa. It likewise reaffirmed its commitment to the New Partnership for Africa's Development (Nepad), the AU's development plan.
Local Chinese Industries
About thirty Chinese industries, according to reports, have moved to site their companies and factories in Ogun State, apparently scared by the complexity of the procedure of setting up businesses in Lagos, the poor state of security in the state, the serious problem of multiple taxation and street urchins (Area boys).
Also another Chinese investor has completed three huge industrial estates in Ogun, which will be launched together with the 30 new industries in the state next week.
Announcing the Chinese investment, the governor of Ogun State Otunba Gbenga Daniel explained that the development is a testimony to the fact that the private sector posture of his administration in the state is paying off. He said his administration deliberately turned to the private sector as the main driver of development in the state. The close collaboration with the private sector according to him has worked very well for the state and the fruits are the results they have began to see in the state.
Investing in Energy
Chinese state-controlled oil company CNOOC Ltd. paid $2.3 billion for a 45 percent stake in a Nigerian oil field in its first major investment since its failed bid to take over Unocal Corp. last year.
The deal, according to reports, added to a multi billion-dollar string of foreign acquisitions by Chinese oil companies, which are aggressively pursuing energy supplies to fuel China's booming economy. The agreement, which requires approval from the Nigerian and Chinese governments, covers a deep-water area of the oil-rich Niger Delta region, CNOOC said. It said the area includes the Akpo oil field discovered in 2000 and three other "significant discoveries."
Another contender for the Nigerian field was India's biggest oil company, state-owned Oil & Natural Gas Corp., which submitted a winning $2 billion bid last month. But the Indian cabinet blocked that deal, contending it wasn't commercially viable.
China imports more than 40 percent of its estimated daily consumption of 6 million barrels of oil, and that proportion is expected to grow amid surging economic growth, according to foreign analysts. China became a net oil importer for the first time in the 1990s after meeting its needs for decades from domestic supplies, and is now one of the world's top consumers of foreign oil.
Between China and Nigerian Railway
China has invested in the Nigerian transport sector, in a deal to help the Nigerian government put back on track the country's foundering railway system. China's offer of a grant and expertise comes after the formulation of a 25-year comprehensive railway development plan that includes redesign of the existing railway tracks and expansion of the lines to new areas across Nigeria.
In October 2006, the government signed a 2.5 billion US dollar loan facility with China, a substantial part of which will be used to finance the refurbishment of the railway system.
In all, an estimated 7,800 kilometres of standard gauge railway network, to connect all 36 state capitals and major cities in the country, will be built by concession-holders, which then will be responsible for infrastructure upgrades, expansion and maintenance, and train operations.
The CCECC is handling the first phase of the project, put at 8.3 billion dollars. Some of the phases will be financed through private investors over a period of time. The entire railway modernisation and expansion project is estimated to cost over 30 billion dollars.
A consortium of international and domestic private investors and banks have already come together to offer 1.4 billion dollars over 10 years for the development of rail infrastructure and services. The contract for the first phase covering 1,315 km of double-track, standard gauge line (1,435mm) from the commercial centre of Lagos in the southwest to Kano in the north (with a branch from Minna (central Nigeria) to Abuja, Nigeria's capital) was signed Oct. 30, 2006 by Nigeria and the CCECC.
The railway modernisation and expansion project will be operated and managed as a private sector organisation and will be able to run 36 trains per day, from Lagos to Kano and back -- and move about 40 million tonnes of goods per year. Currently, the Nigerian Railway Corporation (NRC) is fully owned by the Nigerian government.
A Word for the Wise
African governments have opened their doors widely to Chinese investors mainly on the basis of trust and hope. They expect their relationship to be mutually beneficial in both the short and long term, unlike Africa's relationship with the West. Chinese involvement, especially in troubled areas of Africa, should not only be seen as transparent but should help ensure peace on the continent.
Africa must not rely on external investment from China through selling its oil. Despite the dangers of a new imperialism, China might still provide an opportunity for Africa which Europe and the US have simply failed to deliver.
It is not to say that there are no business men or manufacturers in China who produce sub-standard goods and cut corners to maximise profit. The Chinese are dealing with this problem and one hopes that Nigerian custom and destination inspection officials will do the same.
However, the Nigerian businessmen should be patriotic enough to shun patronising sub-standard goods either from China or elsewhere for the good of Nigerians; with this Nigeria cannot be a dumping ground.
Distributed by AllAfrica Global Media. (allafrica.com)
FTDL54553655
Document AIWTHD0020070228e32r0000p

Forum Spotlights Country's Readiness To Do Business
4,350 words

27 February 2007

09:31 AM

All Africa

AFNWS

English

(c) 2007 AllAfrica, All Rights Reserved
Washington, DC, Feb 27, 2007 (allAfrica.com/All Africa Global Media via COMTEX) --
A one-day conference focused on private sector opportunities in Liberia drew an overflow crowd of 400 registrants last month in Washington, DC. The turnout raised hopes that Liberia may finally be able to reverse a long economic decline caused by 25 years of conflict and attract the