The growing Nigeria-China bilateral trade and strategic cooperation is gradually being marred by increasing incidents of shady deals by some unscrupulous Chinese firms
By Joni Akpederi with reports from Dike Onwuamaeze, Pita Ocha; and Osaze Omoragbon
Nigeria-China trade is ballooning into proportions that are making Africa’s largest market the Asian economic powerhouse’s number one investment destination on the world’s least developed continent. Unfortunately, this great bilateral relationship is being marred by increasing incidents of shady deals by some unscrupulous Chinese firms and individuals that can undermine Nigeria’s struggling economy.
Back in his days as Central Bank Governor, Emir of Kano, Muhammadu Sanusi II warned: “Africa must shake off its romantic view of China and accept Beijing as a competitor as much as a partner and capable of the same exploitative policies as the old colonial powers”.
Today, the loudest alarm bell may have been sounded by Bauchi State Governor Mohammed Abdullahi Abubakar at a recent Ramadan Sahur (fast-breaking meal) in the company of media men. The chief executive decried the activity of an unnamed “Chinese company” that has been known to be taking out minerals worth up to N2 billion monthly from the rich soil without paying any royalties or taxes into state coffers. The governor lamented his powerlessness, as Nigeria’s curious constitution does not permit him to issue mining licences, making it difficult to control the activities of illegal miners.
Deputy Senate President Ike Ekweremadu was quick to add his voice to the contentious issue. He wasted no time in condemning the illegal activities which caused “economic loss and environmental hazard.” He made his feelings known during a visit by Chinese Deputy Ambassador, Jin Ping, to the National Assembly.
The Ekiti State government has not been as helpless as Bauchi’s. Taking matters into its own hands and charting its own “revenue destiny,” the State Internal Revenue Service, last month, sealed off the premises of Hongye Ampic Concept Ltd, a Chinese construction firm in Ado Ekiti over a N71.761 million tax default. The tax agency Chairman, Ashola Akingbade said the state took the decision after unsuccessful attempts to make the firm comply with extant laws in the state despite the enormous sums it earned from contracts.
A damning investigative report (apparently supported by Ford Foundation) on the illegal logging of Nigeria’s prized rosewood (pterocarpus erinaceus) by Chinese businessmen in cahoots with venal Nigerian timber merchants, greedy government officials and corrupt Customs personnel, the activities of rampaging Chinese profit-hunters is causing the nation’s fiscal authorities more problems than they care to admit.
Demand for the controversial rosewood and other valuable wood species (Hongmu, i.e. redwood in Chinese) used for furniture, floorings and sculpture in Asia, brought in as much as $350 million worth of timber into China in 2014.
Comparatively, Nigeria Customs’ record shows that less than $20 million worth of logs were exported in that year. This suggests under-reporting and under collection, if the claim that 45 percent of the rosewood exports going to China are from Nigeria.
Environmentalists and economy watchers are now concerned that not only is uncontrolled logging dire for the environment and the climate change lobby, it is equally bad for the country which needs its considerable forest resources to climb out of recession and unto a diversified economic space. Already, there are concerns that the forests in Southern Nigeria spanning about 17 states are losing not just rosewood but all economic trees at an alarming rate without commensurate accretion of revenues into the nation’s accounts.
Across the country, unsavory reports of Chinese nationals’ involvement in scams and fraudulent activities are on the rise. The police in Calabar are still mulling fraud allegations against Mr Xiao Bo, an employee of Brothers Quarry Ltd in Akamkpa Local Government Area of Cross River State.
Mr Bo was alleged to have diverted the sum of N3.8 million meant for the state into his private account and fled the country. The company’s Managing Director has doused the matter by paying the sum, after unsuccessfully trying to contact the runaway Bo.
Last month, a Lagos High Court was constrained to grant bail to two Chinese businessmen — Tailung Shan, 36, and Xu jing Yao, 22 — who were charged alongside a Nigerian accomplice, Chinedu Madubuike, after hearing a case of illegal importation of fake and substandard tyres. The Standards Organization of Nigeria (SON) has been inundated by reports of fake products from China ranging from electric wires, electronics and plastic products to rice. In the past year, social media portals have been awash with the alleged activities of Chinese firms and businessmen shifting substandard and downright dangerous products into Nigeria’s market owing to the nation’s ineffectual border controls. Worse, Professor Ibrahim James of History Department, Kaduna State University accuses Nigerian importers of “conniving with Chinese companies to produce and import substandard goods into the country.”
Osita Aboloma, Director-General of SON said the fake tyre importers were involved in an “illicit business that could take the lives of millions of Nigerians.”
Still in Lagos, operatives of the state’s Rapid Response Squad (RSS), who swooped on a gang of criminals including two Chinese — Lin Honyang, 47 and Sun Xinai, 49 — after weeks of surveillance, revealed that they had been running a fake embassy in Ejigbo. The Chinese-led team of fraudsters was issuing dud Trinidad and Tobago visas to unsuspecting members of the public. Investigations by the police revealed that the gang had duped its victims of upward of tens of millions of naira before they were nabbed.
In July, last year, operatives of the National Agency for Food, Drugs Administration and Control (NAFDAC) arrested Zhao Chum, a Chinese, who is the Managing Director of Six Six Manufacturing Global Services Ltd and his clearing agent, Christian Ohia for allegedly smuggling controlled substances — Urea Foraldehyde Resin powder into the country.
Mrs Yetunde Oni, the Acting Director-General of NAFDAC, said vigilant operatives of the agency at the seaport intercepted the 2 x 20 feet containers of Urea Foraldehyde Resin purported to be sodium sulphate, imported by Chum’s company without the requisite NAFDAC Chemical Import Permit for controlled substances. “The effective intelligence work of the combined efforts of NAFDAC officers at the Ports Inspection Directorate as well as Investigating and Enforcement Directorate resulted in the discovery of the company’s warehouse at Omu-Ijebu, in Ogun State, where the containers were kept,” she said.
Poor labour practices
Much is also being said about poor conditions of service at Chinese-owned firms in the country. The local press makes great fare of numerous incidents of the high-handedness of Chinese bosses, poor pay and unfavourable working conditions including lax safety rules and standards.
Nigerian staff of the popular construction company China Civil Engineering Construction Corporation (CCECC) took to the streets in July 2015 to protest a litany of alleged misdeeds of the company’s management, some of which are mentioned heretofore, plus unfair disengagement of workers without adequate compensation. They claimed that the company’s workmen’s accident insurance was so poor that injured staff and those who lost their lives in the course of duty were often left to care for themselves.
The company fired back, citing their commendable presence in Nigeria’s infrastructure industry since 1981 and the visible trail of successes in multi-million dollar projects. The company issued statements saying “we employ local workers, train them for various jobs and continue to help them improve their working skills”.
A bitter grievance of Nigeria’s labour organizations is the alleged penchant of Chinese firms to flout laws concerning employee quotas stipulated by immigration authorities.
Huawei Technologies, the Nigerian arm of the Chinese global giant got rattled recently when an online publication accused it of hiring more foreign workers than permitted by law. Of the 675 employees, the source said, only 354 were Nigerians, constituting 52.44 percent instead of the statutory 75 percent in the books. The news source alleged that many of the Chinese staff carried fraudulently obtained work permits.
China’s Embassy Reacts
Ambassador Gu Xiaojie, China’s former “eyes and ears” in Nigeria, says his home government does not condone any of the sharp practices his countrymen are being accused of. He also assured inquirers that the Chinese embassy urges Chinese firms in Nigeria to respect their host country’s laws while remaining alive to their corporate social responsibility to the communities they operate in. He, however, notes that the otherwise cordial relationship between Nigerians and Chinese, nurtured over the years, may be strained by difficulties in language, culture and social norms. Chinese companies, he says, are today providing job opportunities to Nigerians in different parts of the country and would like to see more of such cooperative efforts rather than less.
He is right in some respects. Nigeria’s Bank of Industry (BoI) reckons that trade volume between the two countries grew exponentially from about $800 billion in 2000 to $13 billion in 2014. Ken Ukaoha, President, National Association of Nigerian Traders says that 83 percent of goods imported into Nigeria comes from Asia of which China accounts for 73 percent. In his words, “China cannot be a foe”.
Ambassador Xiaojie reveals that Nigeria is growing to be as indispensable to China as the Asian giant is valuable to the country. Nigeria is currently China’s “number 1 engineering market; number 2 export market; number 3 trading partner and major investment destination in Africa”.
Today, China and Chinese firms are executing the largest infrastructure development projects in Nigeria from cross-country standard gauge railways, through major hydro-electric dams in the North, to the celebrated ongoing Lagos metro. All these are not just being executed by state-backed Chinese firms, they are also benefitting from Chinese finance from the likes of the deep-pocketed China Exim Bank. Back in December 2015, Chinese President Xi Jinping pledged a massive $60 billion in financial support to African economies. It is obvious as things stand today, that Nigeria is receiving the lion’s share of this assistance package, and China, as Ukaoha says, is not Nigeria’s enemy.
Odious as some of the alleged crimes of Chinese firms are, a part of the blame falls on greedy Nigerian nationals rather than Chinese businessmen. Dr Ibe Kachikwu, Minister of State for Petroleum indicated as much at a reception organized by officials of the Nigeria Embassy in Beijing.
The minister was responding to enquiries from Chinese businessmen who had offers for crude oil sale from criminal oil cabals in Nigeria. Kachikwu told them that such offers were fraudulent and were known to Nigerian authorities who, unfortunately, are unable to catch the culprits or stop their activities.
The upshot, naturally, is that, at least some of the Chinese merchants (as well as nationals of other countries) accused of fraudulent oil deals are suckered into the illegal business by highly-placed Nigerian officials in collaboration with dastardly brazen oil mafia in the Niger Delta.
The minister could only appeal to the Chinese to take caution and cease patronizing the oil thieves in Nigeria as it does takes two parties to consummate any criminal enterprise.
Muda Yusuf, Director-General of the Lagos Chamber of Commerce and Industries (LCCI) also says that the Nigerian collaborators of the unscrupulous Chinese businessmen encourage them to cut corners. He adds that LCCI had engaged the Chinese on the issue of the substandard products brought into Nigeria from China and their response was that Nigerian importers always demand for low-quality products. Yusuf, however, says that the weaknesses of Nigeria’s regulatory institutions give the Chinese the latitude to indulge in such sharp practices. “That is why Nigeria must strengthen its institutions,” Yusuf says.
It takes two…
Julius Solomon, Director of External Relations, Overseas Chinese Centre in Lagos provides the Asian country’s perspective. Complaints of Chinese businesses deliberately targeting Nigerian market with fake and substandard products are exaggerated, he says. “Don’t forget that Chinese products are found in almost every country of the world,” he tells TheEconomy. “What we should do as a country is to learn how to use Chinese technology to better our lives,” he adds. Gionee, a Smartphone brand, he discloses, is produced in China but is owned by a consortium owned by businessmen from both countries, just as many products shipped into the country are manufactured under partnership agreements with Nigerians.
The public relations man also has an angle to the welfare issue: “The Chinese are workaholics; they like to work,” he says. “If you want to work with the Chinese, you had better be ready to work.” And here lies the problem.
He paints an unflattering picture of the average Nigerian worker. “Nigerians like leisure: it is only in Nigeria that a banker (for instance) expects a client to wait until he has finished a meaningless private banter on the phone before being served.”
He digs in: “It is only in Nigeria that your staff use official phone for private calls. That is what the Chinese businessmen would not tolerate and the Nigerian cannot understand.” Solomon sums it up: “To the Chinese, if you are signed up to work for 5 hours, you have to give value for 5 hours. That is best practice the world over, except in Nigeria.”
Speaking on the allegation that Chinese firms don’t pay taxes and other rates and also neglect fair labour practices, Solomon is blunt. “It takes two to tango,” he quips. “If you say the Chinese businessmen in Nigeria cut corners, then we (Nigerians) are guilty of the same offence.” His argument is impeccable: “If we are strict with our laws and apply them properly, then nobody can cut corners, not the Nigerian, not any foreigner.”
No to Chinese get-rich-quick attitude
He may be right about the complicity of Nigerians in much of the unsavory deals. But that does not excuse the Chinese get-rich-quick attitude to business in Nigeria.
Professor Mike Obadan of the Economics and Statistics Department, University of Benin says the Chinese have an obligation to “do business in a clean way” as they do not treat their own country’s laws with such disdain and levity. Nigerian law enforcement agencies should take their task of monitoring them seriously, he admonishes.
The don also advised Nigerian authorities not to “trade away our national interests” and must not approach trade with the Asian behemoth from a position of weakness that encourages unconscionable exploitation.