China’s Impact on Nigeria

China’s Economic Ties with Sub-Saharan Africa

The International Monetary Fund (IMF) has revealed that China’s declining economic growth will affect Nigeria’s economy. Over the past 20 years, China has developed strong economic connections with countries in sub-Saharan Africa. As a result, Nigeria’s growth may be reduced by an average of 0.5 percentage points due to China’s recent slowdown.

China’s Role in Sub-Saharan Africa

China is the largest trading partner for countries in the region. It purchases one-fifth of the region’s exports, which include metals, minerals, and fuel. Additionally, China provides most of the manufactured goods and machinery imported into the region.

Ripple Effects on China’s Slowing Economy

China’s recovery from the pandemic has slowed down due to a property downturn and decreased demand for its manufactured goods. This slowdown will have consequences for Africa. According to the IMF, a one percentage point decline in China’s growth rate could lead to a 0.25 percentage point decrease in average growth within a year for the region. For oil-exporting countries like Angola and Nigeria, the impact could be even greater, with an average loss of 0.5 percentage points.

Effects on Sovereign Lending

China’s slowing economy also affects sovereign lending to sub-Saharan Africa. Last year, lending fell below $1 billion, the lowest level in nearly two decades. This reduction in financing for big-ticket infrastructure projects will be felt in countries like Angola, Cameroon, Kenya, Nigeria, and Zambia, where China is the largest bilateral official lender.

Adapting to China’s Slowdown

Sub-Saharan African countries will need to adapt to China’s economic slowdown by increasing inter-African trade and strengthening their economies. The IMF suggests building resilience through tax policy reforms, improvements to revenue administration, and efforts to diversify African economies. It also highlights the opportunity for countries to develop new trade relationships and local processing capabilities in the renewable energy sector.

China-Nigeria Trade Relationship

China is a significant trade partner for Nigeria. In the first three quarters of 2023, the bilateral trade volume between China and Nigeria reached $17.25 billion. In 2022, the trade volume amounted to $23.9 billion, with China exporting $22.3 billion worth of goods to Nigeria and importing $1.6 billion worth of goods from Nigeria. Additionally, Nigeria’s borrowing from China has risen to $4.29 billion as of December 2022.