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An analysis of China-Nigeria investment relations
Purpose – The purpose of this paper is to analyze the economic relation between China and Nigeria
in the area of foreign direct investment (FDI).
Design/methodology/approach – The study employed the use of quantitative (descriptive
analysis such as ratios, percentages and correlation as well as cross tabulations), qualitative (key
informant interviews and surveys) and case studies – for example the railway transport project
handled by the Chinese. The use of surveys assisted the study to generate firm-level data that allowed
the analysis of China-Nigeria investment relations with respect to concerns such as the employment
effects as well as the competitive and/or complementary effects of Chinese firms to local firms. The use
of content analysis of relevant documents and reports obtained from various sources was equally
involved to corroborate the results obtained from primary data.
Findings – The findings reveal that the major characteristic of Chinese investment in Nigeria is its
concentration in a few sectors that are of strategic interest to China, especially in the extractive
industries which are carried out largely by state-owned enterprises or joint ventures. In addition, the
analysis clearly shows that the engagement with China, just like any bilateral relationship, has
some advantages and disadvantages and that optimal outcome of the engagement will depend on the
policies and institutions that are put in place to maximize the complementary effects and to minimize
the competing effects. However, there is need to ensure implementation of laws and regulations in
Nigeria and to ensure compliance by the Chinese investors.
Originality/value – This is the first study to carry out an empirical analysis of the China-Nigeria
relation. The study was able to establish the sectors where the incoming FDI from China is directed
and the extent at which Chinese FDI is bundled with inflows of aid. The study was also able to show
that the incoming Chinese FDI are in resource seeking, and the output targeted at the external market.
The study will be of value to academia and to policy makers who are interested in studying the
China-Africa relation.
Keywords China, Nigeria, International investments, Economic sectors, Extractive industries,Foreign direct investment, FDI, Infrastructure, Crude oil
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