Andrew Leung International Consultants Ltd Regenerating the Niger Delta

a China Story Andrew K P Leung, SBS, FRSA A presentation at the

African Business Forum, Commonwealth Business Council Marriott Hotel, Grosvenor Square, London

Tuesday, 7 July, 2009

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Contents

• Nigeria-China Relations • FOCAC Beijing Action Plan 2007-9 • Latest investments in oil resources • Investment in infrastructure • Private enterprises & SMEs • Trade and investments in agriculture • China’s approach to Africa • Challenges of the Niger Delta • Responses and Opportunities

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Nigeria - China Relations

• Policy towards China warmed

1958

. Ambassadors exchanged

1971

(before Open Door Policy) • Respects Nigeria’s

non-aligned

v China’s

One China

policy • China’s

Africa’s imperatives

: – Surging demand for energy/resources

to sustain fast growth

–

Energy security

and EU) - failed CNOOC attempt for UNOCAL – Nigeria Africa’s biggest oil producer; oil 75% of Nigerian’s exports (China imports only 12% of Africa’s oil (=1/3 of China’s demand) v 31% in the case of US –

South-South

solidarity – UN, WTO –

Taiwan

factor – Africa near economic take-off –

comprehensive links

• Jan 06 MOU

Strategic Partnership

, 1st African nation to sign • 12/2006

1 st direct flight

to Africa - Beijing Lagos via Dubai • > France as

Africa’s 2 nd

($107b 1 st

largest trading partner

FOCAC 3 target $100b by 2010 by 2 yrs);

FDI

after US 8 mths 2008) ($5.2b trade deficit for China) > Africa $74.8m 2003 to

$1.57b

2007 (

China Review

, Spring, 2009 &

EAI Background Brief

05.03.09) •

Sino-Nigerian trade

rocketed - $384m 1998 -

$4.3b 2007

; Nigerian non-oil exports to China quadrupled. FDI into Nigeria at $3b as China’s most important trading partner S of Sahara 3

• • • • • •

FOCAC 3 Beijing Action Plan 2007-9

100 senior

agricultural

experts + 10 demo sites • $5b

China-Africa Development Fund

to assist reputable Chinese companies to invest in Africa • • • Increase

zero tariff items

from 190 to 440 for African countries with diplomatic relations Double $3b

development assistance preferential loans buyers’ credit

by 2009 and $2b preferential for African countries

export

Cancel interest-free loans due by 2005 for (heavily-indebted poor countries)

HIPCs

Train 15,000 African

professionals

100 rural

schools

+ double

scholarships

to 4,000 10

hospitals

+ 30 anti-malaria

clinics

+ $37.5m for anti-malaria

drugs

300 young persons in

Chinese Young Volunteers Serving Africa

Program to support education, agriculture, sports, and health-related programs. 4

• • • • • • • • • •

Investment in oil resources

Nigeria

needs $10b p.a.

by 2010 for proven reserve 40 bb (

People's Daily

, 20.4.05) (Light low-sulphur ‘sweet crude’) July 2005,

PetroChina

renewable annually $800m for 30,000 bpd over 5-yr period, Jan 2006,

CNOOC

$2.7b 45% stake in Total-operated deepwater oilfield peak 225,000 bpd

Four oil exploration licenses

in exchange for $4b in Nigeria’s infrastructure; 7 development agreements for $500m export credit (

Reuters

, April 27, 2006) Controlling stake in

Kaduna oil refinery

110,000 bpd Preference for Chinese firms in

Niger Delta

+

Chad Basin Sinopec

3-yr contract for OML64 + OML 66 with NNPC’s NPDC China’s ‘

right of first refusal

’ on oil blocs in return for repair works for Kaduna Refining and Petrochemicals Company, hydropower plant in Mambila, Plateau State etc

CNOOC

deal with S African Petroleum Company for $2.3 b 45% stake in OML 130,

500 sq m offshore oil and gas field near the Niger delta.

Extra $2 b to develop the field 24 June, 2009 Sinopec announced purchase of

ADDAX

, a Swiss co listed in London and Toronto worth $9b with oil drilling rights in Iraq, Gabon and Nigeria (China’s largest overseas acquisition so far) 5

Investment in infrastructure

•

FTZ

2006 investment to establish a

Lekki Free Trade Zone

(FTZ) in Lagos, 1 st in Africa (150 sq km @$5b) •

Railways

October 2006, $2.5b to modernize 7.800 km

Railway

linking all 36 states and major cities

Nigeria

• • • •

Telecommunications

Feb 2005 Helped build and launch

Nigerian satellite

Chinese Civil Engineering and Construction Company

(CCECC)

built the

Nigerian Communications Commission building

in Abuja April 2005, ZTE Corporation entered a deal with NITEL to expand Nigeria’s

CDMA network Huawei Technologies

CDB $20 m for $200m telecom equipment for a nationwide mobile phone CDMA service. Helps secure

Reliance Telecommunications Ltd. (

RelTel) to become largest fixed wireless co in Nigeria; Lagos + Abuja offices employ manyNigerian graduates. •

Social infrastructure

Over past 5 yrs, > $ 5.5 m of

drugs

;

water supply projects medical equipment +

+

training of technicians

.

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Private enterprises and SMEs

• • • Growing

back-up trade

e.g. Shanghai ($172m 2008 +10.3%) symbolized by ubiquitous Okada motor-cycles • • China’s Geo Engineering Corporation (GEC), CCECC and a Nigerian Construction firm, Sky Technical on

construction anti-flooding, anti mosquito infestation and drainage

Jan 2009 agreement reached on a

assembly plant

in Lagos

vehicle

Zhuhai Minghong Group Corporation Limited to revive the 350-acre Oru East of Imo State

Awoomama Resort

in 2 July 2009 Chinese business delegation (led by

Zhejiang

resources. Provincial Gov) promised to partner with Ogun State government to develop seaports, rail, industrial estates, agriculture, and exploitation of natural 7

Trade and Investments in agriculture

• • • China to construct

$2.5b hydropower plant

for Adamawa • • Over 500

Chinese experts and technicians

in various fields of agriculture (e.g. small dams) in 20 states of the Federation, working with Nigeria agriculturists and farmers July 2005 Genetic International Corporation of China (GICC) bought 1 102,000 tonnes. Also st consignment of 100,000 metric tones of fresh

cassava chips

from Nigeria. Thereafter order for another

cocoa beans

and

rubber

and other agricultural produce.

Nigeria and China to cooperate under redesigned

National Programme on Food Security

on developing commercial livestock to improve Nigerian socio economic conditions. China to begin

acquiring agricultural assets overseas

because of rising concern for own food security.

(e.g. soybean production in Brazil) 8

• • •

China’s approach to Africa

Principles

:

Friendship

,

Equality; Mutual Support; Win Win

Development

Modalities

–

Non-interference; Non-conditionality, Non confrontational

Challenges

–

Oil

has not reduced poverty but has led to

deprivation, degradation, and violence

(e.g. Niger Delta) – Popularity with host countries v conflict with domestic and international demand for

governance

improvements ( and safeguards of

MEND human rights

– Movement for the Emancipation of the Niger Delta ) – sabotage and terrorism. Over 700 oil workers evacuated from oil platforms in Delta inc ½ Chevron Abiteye oil pipeline bombed (18.06.2009 ) – Chinese cheap products and imported labor threaten

local jobs and businesses

and their export markets – Chinese SMEs outcompete local

informal business sector

(90% of private sector in Africa employ mostly Chinese except for low-end jobs (e.g guards) – China’s explosive demand for energy blamed for growth of biofuels –

food prices

affecting food-deficit communities – Language, culture, religion, and racial understanding of – Lack of capabilities to interact with

barriers

– Inadequate mutual media presence – lack of

grass-root sentiments local and international NGOs

– Lack of

capacities for institution building

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Challenges of the Niger Delta

(

UNDP Niger Delta Human Development Report

2006) • •

‘administrative neglect, crumbling social infrastructure and services,

high unemployment, social deprivation, abject poverty, filth and

squalor, and endemic conflict.

Corruption, mismanagement, human rights abuses, inadequate access to justice +human security =alienation

• • • • • • • • • • • • • • • • • Oil Curse -

x diversified and sustainable economy

and rubber plantations neg or abandoned. Original palm oil X

accountability, transparency, integrity

esp local gov Lack of

peace, education, justice and equity

(resources) X

access, redress + empowerment

(inc women)e.g.NDDC Gross

inequalities

and wealth distribution Lack of

coordination of all stakeholders Env degradation

~ecological collapse: illegal logging, gully /coastal erosion, salination, oil spills, gas flares, subsidence

Regulatory agencies ineffective

. Cases against oil companies only in Federal courts, out of reach for most Numerous

armed disorders and unrests Small settlements + swampy topography

x sustainability

High unemployment

> oil wealth. 85% in informal sector Nearly all

school facilities in extreme disrepair

unskilled population in shady/criminal activities Large young but

Poor infrastructure

- roads, water, power, fuel

,

waste, telecom Dismal lack of

healthcare

and access to

safe drinking water Urban squalor, unemployment and crime Aids/HIV

endemic - poverty, inequalities, marginalization, x edu

Social instability, decayed social values

cynicism and violence - anger, hopelessness, 10

Responses and Opportunities

•

Peace, stability,+ well-being

of the many are the foundations of governance.

A country’s real wealth

is the quality of its people. Instability of Delta bad for

Region + resource-hungry world

•

More oil revenue allocation + accountability

(trust funds?) social + capacity building (rule of law, access to justice, real democracy) • Embrace the

Extractive Industries Transparency Initiative

(EITI) •

Promote broader skills and output

– Re-vitalize

agriculture

and traditional economic activities – Create

agro-businesses

– outside the extractive industries -

China to invest in manufacturing in the Niger Delta

• Intensify cooperation on

food, health, education, poverty reduction, law and order, work safety, the environment, human rights

with local and international actors, including investors –

UN operational agencies, African Union, African sub regional bodies, G8 Summits, civil society (inc NGOs)

-

China Public – PPP ‘sans frontiers’

local and international NGOs to partner with •

Bilateral consultations

with stakeholder countries • An

FOCAC Permanent Secretariat

?

•

UNDP’s 7 Agendas

; Peace, Local Government, Diversify the Economy, Social Service and Inclusion, Sustainable Livelihoods, Integrated Approach to AIDS/HIV, Partnerships for Development 11

Andrew Leung International Consultants Ltd

Thank you

Andrew K P Leung, SBS, FRSA www.andrewleunginternationalconsultants.com

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