Wednesday, September 16, 2015

READ: How Chinese’s investors are dominating the Nigerian business landscape

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WITH an approximated 170 million population and growing at over two per cent per annum, Nigeria ranks the seventh largest country in the world.  According to United Nations (UN) statistics, Nigeria’s population will hit 230 million within the next 20 years. Representing over 65 per cent of the effective West African market,  the country remains the most competitive destination for the establishment of medium and large manufacturing industries.
Like the early morning bird, China has since positioned itself to take advantage of.......
this expansive market by unleashing its horde of investors and businessmen on the manufacturing sector. From textile to garment; household appliances, automobile; consumables and iron and steel as well as ICT products, China has taken over, churning out tons of products for various segments of the market.
More Chinese enterprises are expanding their investments in the manufacturing sector ostensibly in the hope of transferring technologies and training personnel to increase local job opportunities. For instance, Chinese-owned Western Metal Products Company Limited (WEMPCO), a multi-billion naira integrated steel mill, situated at Magboro, on Lagos-Ibadan Expressway, Ogun State, is the first of its kind in Africa. The sprawling steel-manufacturing  plant boasts of a production capacity of 700,000 metric tonnes and a production machinery of five-stand Tandem Mill.
The factory, according to its Group Managing Director, Mr. Lewis Tung, will produce cold roll steel sheet of up to 0.15mm in thickness and coils of the same dimension and above. Other facilities in the plant include: a 52-megawatt generator for power supply; a water treatment and recycling plant; an acid generating plant; an air purifier and an annealing line.
The economic benefits of the investment are huge. Besides boosting economic activities of the immediate host communities, local, state and the federal governments, it will spur increase in downstream economic activities and create jobs for artisans such as technicians, drivers, auto technicians and fabricators. Mr. Tung added that it will also enhance training and technology transfer. More importantly, the investment will fill the gap left by the moribund Ajaokuta Steel Company in Kogi State.
Another area witnessing massive investment from China is the agriculture sector. A leading Chinese company, New Hope Liuhe Company Ltd., has indicated investment interest in agribusiness. At a meeting with the Executive Secretary, Nigerian Investment Promotion Commission (NIPC), Mrs. Uju Hassan-Baba, at the commission’s headquarters in Abuja, said it plans to invest in other sectors like manufacturing, processing and feeds selling, raw material additives, milk products and agricultural bye products, among others.
Chinese enterprises are also investing in seed cultivation and have become the Federal Government’s seed providers, a development that has raised local grain production.
The Chinese has been visible in the transport sector, especially in rail transport. The $1.49 billion Lagos-Ibadan railway contract has been awarded to China Civil Engineering Construction Corporation (CCECC) and the Olokola Deepwater Port project awarded to the China Ocean Shipping Group. The CCECC is also handling the 27.5-kilometre Marina-Iddo-Okokomaiko  Lagos Light Rail project. Lagos State Governor Akinwunmi Ambode has assured that the multi-billion naira project will be completed within 12 months.
According to an Ernst & Young report on Nigeria issued for the 2014 World Economic Forum on Africa, CCECC is the main engineering, procurement and construction contractor for the Lagos rail mass transit project. The project’s first phase -‘Blue Line’ – is scheduled for completion towards the end of this year.
The state-owned Export-Import Bank of China (EXIM Bank) is also providing a $500 million concessionary loan for the 186-kilometre modernisation of the Abuja-Kaduna rail line, which includes the building of 36 bridges and nine fully-developed stations. The Federal Government will source the $374 million balance. Track laying for the single standard gauge line was formally launched in July, 2013.
Before his inauguration on May 29, Buhari hosted a delegation from the CCECC, who paid him a visit to present a prototype of its high speed rail project. Observers described the visit as an indication that the Buhari administration may be looking to develop a high-speed rail network across Nigeria.
Before his exit from office, former President Goodluck Jonathan resuscitated the comatose rail network with a N24 billion ($151.7 million) lifeline that involved the upgrade of tracks and signalling equipment. With the purchase of 25 GE locomotives, renovation of 500 wagons and passenger coaches, services have resumed on the 1,126-kilometre Lagos-Kano train route. The route had been shut for a decade.
The revival came on the heels of the inauguration of some air-conditioned, diesel-powered railcars and six 68-seater air-conditioned long distance coaches in June last year. The new rolling stock was procured by the Nigerian Railway Corporation (NRC).
It was part of Federal Government’s ‘25-year Railway Strategic Plan’, aimed at encouraging private investment for the renovation of the country’s existing narrow gauge railway lines and building new, standard-gauge lines.
That was complemented by China in 2012 with the formal opening of  a Railway Technology Training Centre by CCECC in Abuja to assist Nigerians in developing the skills needed to support plans for rail and mass transit systems. The China Railway Construction Corporation Limited described its $8.3 billion rail network modernisation project in the country as its “biggest overseas project.”
Besides the rail and power plants, the Asian nation is also instrumental to supporting Nigeria with financial arrangements and investments in strategic infrastructural projects including road, airport terminals and free trade zones, among others.  For instance, China and Chinese companies are major stakeholders in the Lekki Free Trade (LFTZ), Lagos. On completion, the project will attract international investors in the manufacturing, commerce and tourism, among other sectors.
The project is expected to provide 300, 000 direct and 600, 000 indirect jobs in the next few years. That informed the description of the LFTZ as one of the biggest Chinese projects in the country by former Industry, Trade & Investment minister  Olusegun Aganga.

Culled - TheNation

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