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Opinion: Who's in charge, China or Nigeria?

Despite China’s escalating energy requirements, its attempts to expand its energy relationship with Nigeria have largely failed.

In the aftermath, China has begun to seek opportunities to acquire shares in established oil producing companies well-versed in navigating the tricky Nigerian oil industry. Hence, in 2009, the China Petroleum and Chemical Corporation, also known as Sinopec, purchased Canada’s Addax Petroleum, one of West Africa’s largest independent oil producers, for $7.2 billion.

Chinese direct investment in other sectors has had some success. Chinese construction companies are active in Nigeria infrastructure projects, and the Chinese have investments in manufacturing, telecommunications, power and transport.

As China’s trade and investment increased, so too has its resident population in Nigeria. The Chinese in Nigeria numbered an estimated 45,000 in 2007, up from 8,300 in 1993. By comparison, estimates of the number of American citizens resident in Nigeria are about 20,000 with a significant percentage being the American-born children of Nigerian nationals. Many of the resident Chinese are involved in small enterprises. For example, by 2007, Chinese restaurants were ubiquitous, and among the elites, “going out to eat Chinese” was a celebratory event.

Nevertheless, Nigerian and Chinese business practices remain far apart. For example, Nigerian complaints abound about the Chinese being “racist,” and rarely use Nigerians for managerial positions. They are notorious for paying low wages for indigenous labor. Nigerians also accuse the Chinese of dumping products of inferior quality and of destroying the indigenous Nigerian textile industry through smuggling in connivance with corrupt Nigerian officials.

The Chinese respond that the Nigerian market, characterized by poverty, demands cheap goods. The collapse of the textile industry in the north, however, probably owes more to the failure of the power sector than to Chinese competition.

While Yar’Adua’s review of Obasanjo’s dealings may have been motivated by self-interest, it highlighted the Nigerian lack of transparency with respect to infrastructure reconstruction and oil and gas investment, and the impact of domestic political rivalries.

Goodluck Jonathan, who assumed the presidency after Yar’Adua’s death in May, is close politically to Obasanjo. According to a Chinese diplomat, Obasanjo retains substantial personal business interests in China. He may advise Jonathan to revisit “oil for infrastructure” should the latter be elected in 2011. In any event, any Chinese economic role in Nigeria is constrained by specifically Nigerian political and economic realities. Abuja, not Beijing, is in the driver’s seat.

John Campbell is the Ralph Bunche senior fellow for Africa policy studies at the Council on Foreign Relations. From 1975 to 2007, Campbell served as a U.S. Department of State Foreign Service officer. He served twice in Nigeria.