Tuesday, January 10, 2006

China in Africa: The CNOOC Nigerian Oil Deal

Recently Chinese financial investments in African countries has been making headlines in the MSM and in the Blogosphere. The Washington Post ran a story yesterday on the announcement by CNOOC Ltd., a Chinese state-owned energy company, of its USD$ 2.3 billion deal with the Republic of Nigeria for access to a large offshore oil and gas reserve. Nigerian blogger Orikinla Osinachi of the Nigerian Times blog was one of the first to pickup the WAPO article.

Following is my comment to Orikinla's post CNOOC: It's a good deal

"I found your post today while researching information about Chinese government and private sector investments in Africa. The link to your blog was directly from The Washington Post news article titled "CNOOC Announces $2.3 Billion Nigeria Investment". Although increased direct foreign investment in the Nigerian economy is a good thing generally, I'm not so certain that CNOOC, a Chinese state-owned and controlled energy company, is the kind of business partner the people of Nigeria would want. For example, the fact that China's military, economic, and diplomatic support of the murderous Khartoum regime in Sudan is directly linked to Sudan's oil reserves and exports to China would probably not sit well with a majority of the Nigerian people, would it?

In other words, the genocide and ethnic cleansing we see taking place in Darfur and parts of southern Sudan today can be directly linked to China. The Chinese government and so-called Chinese private investors supply the regime of Omar al-Bashir with weapons (helicopter gunships and aircraft, heavy-duty automatic weapons, landmines, mortars and rockets, etc.), the Chinese military personell needed to train the Sudanese military and police how to use them, and loads of money in the form of revenues from oil exports and generous Chinese bank loans. The various peoples of the Sudan don't see any benefits or at best little from the money earned by oil exports to China and elsewhere by the way.

While you are busy thanking God for this announced CNOOC deal in Nigeria, be sure to ask Him what he thinks about China's complicity in the genocide taking place in Darfur and the rape of the Sudan."

Chippla Vandu of Chippla's Weblog - Thoughts on Issues has a very appropriate and timely post on perceived oil wealth in Nigeria titled Poverty Beyond Corruption. Chippla brought the subject of China's newfound love affair with African business and political leaders to his readers attention in his April 2005 post titled The Future of Africa is Not China re: the Asian-African Summit 2005. Here is the link to the Xinhua News Agency article "Asia Africa on way to new strategic partnership" which preceded the historic Golden Jubilee of the first Asian-African Summit at Bandung in 1955. Yale University's Yale Global Online published a good op-ed piece from the Jakarta Post on April 6, 2005 by Joself Purnama Widyatmadja titled "The Spirit of Bandung".


I must say that this post is just an opening salvo from this blogger on China's strategic interests for Africa, inspired by Ethan Zuckerman's excellent post and question of January 8th: "Chinese trade with Africa - good or bad news?". Of course with the World Economic Forum Annual Meeting 2006 at Davos, Switzerland coming in just a few weeks economics and development issues are at the forefront of many people's minds. The theme of this year's annual meeting is The Creative Imperative and you can read more about the organization at the WEF official website. The countries and economies of China and India will be a major focus at this year's event.

What do you, my readers, think?
Is China's renewed interest and financial investments in Africa a good thing for the people of the continent or not? Do you have some examples of how it is working well and if so, where?

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18 comments:

Orikinla Osinachi. said...

The Chinese have been doing business in Nigeria even before I was born and the Ibos who are the most business-minded people in Nigeria have been trading on "Made-in-China" goods for decades and our relationship with China has been very cordial.

The Cold War delayed the large investments of China in Nigeria, because of the capitalist monopoly of the Western powers in Nigeria and they frustrated both Russia and China in Nigeria.

The Ibos learnt Communal Mercantilism from China. And our flourishing Made-in-Aba and Onitsha economies were developed from our Economic relationships with the Chinese, Japanese and Indians.

China supported Nigeria's bid for a permanent seat in the United Nation's Security Council. But America and her European allies frustrated our bid.

Trade between Nigeria and China rose from $578.43 million to $1.858 billion in 2005.

I prefer China to America and Europe. The Western imperialism and capitalism left Africa in ruins. Go and see Liberia that was an American colony. In ruins. Where were the Americans when Nigeria spent millions of dollars and lost over 800 Nigerian soldiers in the ECOMOG Peace Keeping Operations in Liberia.

The success of Eastern Nigeria in real market economy is due to our partnerships with the Chinese. And if the Chinese oil companies have been in Nigeria as long as the American and Western European multinational oil companies, the host communities in the Niger Delta of Nigeria would not have been so neglected and underdeveloped as they are today.

Come and visit Aba in Abia State, Owerri in Imo State and Onitsha in Anambra State and go to the Ibo markets in Lagos and Kano and you will see how much we have learnt from the Chinese, Japanese and Indians and not from the capitalist Americans and Europeans who rip us off through their multinational companies and Money Lenders, the Paris Club, London Club, IMF, World Bank and other imperialist financial institutions.

Ibos don't loot the treasury and go and hide the loot in Swiss banks and buy luxury homes in America and Europe, we use our money to invest in our cottage industries based on the Chinese models. The Chinese and Japanese have taught us good lessons on how to develop our own Made-in-Aba and Made-in-Onitsha industries.

Come and see how the American and European multinational oil companies have ruined their host communities in the Niger Delta of Nigeria.

I thank God CNOOC coming to challenge and break the Western capitalist monopoly of our oil exploration and export in Nigeria.

God bless Nigeria and God bless China.

Imnakoya said...

I don't have any qualms with Nigeria doing business with the Chinese as long as we boost our technological base in the process. That is all there is to it.

The success of Eastern Nigeria in real market economy is due to our partnerships with the Chinese... Really, what success Orikinla?

And if the Chinese oil companies have been in Nigeria as long as the American and Western European multinational oil companies, the host communities in the Niger Delta of Nigeria would not have been so neglected and underdeveloped as they are today.

This will only remain wild assumption because past events have show what the Chinese can and can't do.

We need not get carried away here; Nigeria must benefit from this deal monetarily and technologically. Anything short of this is a rip-off.

Chippla Vandu said...

Though I wouldn't mind being described as a Sino-skeptic, I pretty much appreciate Chinese investments in Africa. However, I am deeply distrustful of a relationship where China gets to export predominantly manufactured goods into Africa, while African nations, on the other hand export raw materials and unprocessed goods to China.

Chinese investments can be felt in some parts of Africa. In Nigeria for instance, the Chinese are involved in rural telecommunication and agricultural projects. They recently set up a mobile phone manufacturing outlet in the capital, Abuja. I'm not sure if they've started production.

My general perception is that the Chinese investors are better appreciated in Nigeria than American and European investors. The latter are seen as greedy businesspeople that put profit before everything else. This does not mean that the Chinese (or any other business people) are any better. Rather, it is simply the result of the fact that for the most part of Nigeria's history, American and European companies happened to be the ones with the requisite technology for investing in lucrative industries such as oil and gas.

Chinese investments in Africa can be a force for good if and only if technology transfer occurs, which will benefit local companies and give rise to local startups. For now, I cannot be certain that such is happening. Therefore, I choose to remain a Sino-skeptic for the time being.

Orikinla Osinachi. said...

Chippla's analysis is very objective and I agree with him.

Imnakoya,
The backbone of our progress in Eastern Nigeria after the civil war is not Federal Government Revenue Allocation, but our ingenuity in entrepreneurship based on the models we learnt from the Chinese, Japanese and Indians since 1970 to date.

We are producing auto spareparts, electronic spareparts, household implements, dresses, footwears and other goods we have learnt from the "Made-in-China" goods we imported years ago. And from the success we have built housing estates all over our towns and cities in Eastern Nigeria and other parts of Nigeria.

I repeat that if the Chinese were the first people to discover oil in Nigeria, Nigeria would have fared better than what she is today as an underdeveloped oil rich African nation exploited and damaged by American and Western European multinational oil companies.

Western Imperialism, Colonization and Neo-Colonialism have ruined us. The fact that the Niger Delta is still in ruins is enough proof of the atrocities of Western Looters of our mineral resources.

Last Saturday on Bonny Island a young hard working Nigerian contractor with the Nigerian LNG Ltd was knocked down by a hit and run "Okada" motorbike rider and was in coma. He was not allowed to be admitted in the Nigerian LNG Hospital on Bonny Island, because he was not yet a member of staff. And he died last Monday. But the American and European contractors are enjoying full medical benefits in the Nigerian LNG Hospital and Residential Areas 24/7.

I like debating issues with true life examples.

I ask you again to go and see Liberia that was an American colony. And if you know the Americans who have investments in Liberia and how they enslaved the Liberians till the coups and civil wars exposed them.

Was Bill Clinton not in power when over 800,000 people were exterminated in Rwanda? And Americans and Europeans have monopolized our economies since the Partition of Africa to date.

The hypocrisy of Western democracy is worse than the dictatorship of Communist China and Socialist Cuba.

Do you know how much in billions of dollars America has spent so far in the fraudulent war in Iraq and there were more reasons for America to have invaded Sudan in pursuit of the Al Qaida instead of Iraq.

I am excited over the coming of CNOOC to Nigeria, because I want us to put an end to the monopoly of Western multinational oil companies in Nigeria. The more the competitors and investors the better.

Latest update:
HONG KONG, Jan 10 (Reuters) - Shares in China's top offshore oil and gas producer CNOOC Ltd. (0883.HK: Quote, Profile, Research) rose 2.78 percent on Tuesday morning after it announced a $2.3 billion purchase of a stake in a Nigerian oil and gas field.

http://today.reuters.com/investing/FinanceArticle.aspx?type=mergersNews&storyID=URI:urn:newsml:reuters.com:20060110:MTFH52754_2006-01-10_02-15-27_HKG44750:1

As we say in my mother tongue of Igbo, "Nkiruka", meaning; the future is greater.

Once again, I welcome CNOOC TO

Black River Eagle said...

Thank you for your comments on this subject gentlemen (assuming you are all males Orikinla, Imnakoya, Chippla). I hope that there will be more comments from other readers from Africa and from countries around the world.

This subject matter is most interesting and very important. I would align myself with Chippla's view of being a Sino-skeptic in that I don't yet trust the motives and objectives of the Peoples Republic of China government functionaries and their related business associates as they expand their influence on the African continent. I intend to elaborate on some of the reasons behind my skepticism in follow-on posts about "China in Africa" in as objective a way as possible.

In addition, I do not want to appear to be giving advice to Nigeria, Nigerians, or people from any other African nation about what their economic policies should be re: China. African people have shown time and again that they are more than capable of running their own affairs and reaching important decisions without the interference of people in the West or East.
----------------------------------
Orikinla, I can see that you are passionate about the subject and just livid about Europe's and America's sordid past with Nigeria and West Africa. Many of us would argue that today's bilateral relationships are an enormous improvement and quite welcome by all sides with few exceptions.

Your comments are welcome here, but please try to stick to facts and to the theme of this post: China's business interests and financial investments in Nigeria. I am confident that you will respect my wishes.

sokari said...

http://okrasoup.typepad.com/black_looks/2006/01/the_price_of_ch.html

Black River Eagle said...

Thanks for stopping by Owukori and leaving that link to your January 11th post "The Price of Chinese Oil". Readers, do stop by the Black Looks blog to checkout what top Nigerian blogger Owukori has to say about all this and be sure to follow her links.

Me, I'm reloading myself for my second volley on China in Africa. It's not ALL bad news, there may be a silver lining out on the horizon. Part II coming soon.

Orikinla Osinachi. said...

I am actually a blogging activist actively engaged in regular discussions with all the stakeholders in our oil wealth in Nigeria and as I must have mentioned somewhere I am also strategically located on Bonny Island in the Niger Delta. And since the extra-judicial execution of Ken Saro-Wiwa who would have been blogging today if he had not been killed, we have had violent protests against the exploitation and destruction of the Niger Delta and hundreds have been killed. And we don't want another civil war in Nigeria, because such a war would be worse than the first one. And where I am located, I hold the Aces and even the Joker whenever the chips are down.

CNOOC will learn from the mistakes of the other oil majors operating in Nigeria.

Let us pray for peace in Nigeria.

Black River Eagle said...

Thank you Orikinla for such a good and heated debate on the subject. I think that we may have raised more questions than we have answered though. I'll get back to China in Africa later in follow-on posts to this blog.

All eyes in the African sector of the Blogosphere should be focused on Mama Ellen Johnson-Sirleaf over in Monrovia tomorrow. Her inauguration as President will be a very big day for Liberia and a great day for the whole world.

Amen on Peace coming to all the people of Nigeria... and to all people of the World, someday.

Jeff Chatellier said...

Chinese entrepreneurs have viewed Africa as a place to do business and more importantly a place where you can make money. For this alone they should commended as Africa is in dire need of willing investors.

In Dakar, Senegal, Chinese store owners are seen in large numbers. These people have chosen to move and live in Africa showing their commitment over the long-term. As a result many jobs have been created.

Jeff
www.organiccashewnuts.com

Black River Eagle said...

Just seconds before I noticed your comment here Jeff Chatellier I was reading a very interesting article about Chinese business investment in Africa. The picture is not as rosey as you state in your comment.

In regards to Chinese businessmen operating in Senegal, a recent documentary aired by ARTE TV showed a much different picture than what you suggest. In fact, cheap Chinese imports and Chinese retailers in Dakar are disrupting the local markets and driving many small Senegalese retailers out of business. In addition, the Senegalese employees of some of the Chinese-owned businesses complained that they were treated like dogs (or slaves), poorly paid for their work, if they were paid at all. This of course is not the case for all Chinese businesses operating in Senegal and across sub-Saharn Africa since many do not even hire the African nationals using Chinese workers instead. Some of these Chinese workers are actually forced laborers working off prison sentences and debts according to recent "rumours", but that has not been investigated by any African governments to date so it remains just that, rumours.

Stay tuned if you are really interested in this subject. I will be addressing "China in Africa" issues again on this blog very soon.

Jeff Chatellier said...

I think a distinction between cheap Chinese imports and Chinese entrepreneurs needs to be made as you seem to group the two together. Then you must decide if disrupting local markets is truly a bad thing.

First, Senegalese traders are found all over the world with high concentrations in New York, Milan, and even Hong Kong, allowing them access to cheap Chinese imports. Therefore I disagree that the mere presence of these imports in the market is putting Senegalese store owners out of business. In most cases in Senegal, the Chinese own retail stores and employ Senegalese as clerks and essentially translators. These are new jobs to the economy.

The Chinese are also opening acupuncture clinics, restuarants, and Kareoke clubs which create more jobs and add to the social make-up of the city.

Africa, like the US, will benefit from immigration, which will bring new ideas to the continent. Nobody is upset that Sergy Brin of Russia is trying to put American born Bill Gates out of business. In fact the competition is welcomed.

kpor2005 said...

I welcome the presence of Chinese and other Asian investors in Africa, especially in Nigeria. It will encourage competition between investors from the West and the East. Foreign investments in Africa has been dominated for most part of Africa's mordern era. I think monopoly should have been a better word. Hence, Africa has been taken for granted by the West. I think the rule of the game is changing as China, with India to a lesser extend, is becoming a major player in foreign investment and also consumption market. Thus, I welcome China's involvement in Africa. It will do Africa economies more good than harm.

Kpor2005

Black River Eagle said...

It is becoming more and more apparent to many of us who express deep concern for the PRC's financial investments in certain African nations that this is a minority view. An overwhelming majority of sub-Saharan Africans who have spoken out online and in the international press do not see the issues in the same way as some "Westerners" do.

Fine. It is a matter for the citizens of African nations being courted by the PRC government to debate and decide upon, or better stated, a matter for the governments of these countries to decide upon as citizens there are rarely if ever consulted before decisions are reached and money changes hands.

In African countries where there is a good, strong, and responsible system of government in place it should work out just fine. In those nations where corruption and graft rule the day it will work out as it always has, to the benefit of the few at the expense and suffering of the many.

Whichever way it goes, the Wicked Witch of the West is not going to bail you out on this one. Let's wait and see how well you do with your new friends from Beijing.

If you get into trouble, don't call us, we'll call you.

Emeka said...

I welcome the chinese presence in Nigeria and I do think that their presence will boost investments in the country.
However, I am worried about Nigeria getting back to the indebted situation it was with the paris club.

Combose said...

Very interesting topic.
Please read http://muchwezi.blogspot.com for my comment on Sino African trade issues.

Anonymous said...

No offence but why do you all hold the Chinese in such high regard? Have you been to china? Have you seen the atrocities they commit in the midst of their own people? Why do you think they would have been better than the western countries? A majority of their population live on less than $1 a day and they are grateful for even that. Sudanese are African like us so why should we in the name of our progress turn a blind eye if it is true that they are encouraging ethnic cleansing in that country? I am not promoting western countries just be careful not to exchange one devil for another. The Ibos have always had the flare for being industrious, and should be given their own credit. They can still stand to improve though and not just stay at the stand still that they are now and china is not the country to emulate because of the quality of their mass produced goods.

Anonymous said...

These my ibo brothers are terrible! You say you are industrious, but you end up importing fake drugs, coco, over used spare parts. Reasons for which you wanted to even kill our beloved sister in charge of NAFDAC. Now you have the Chinese doing a lot for you that we Nigerians cannot do for ourselves like building the rail systems, developing oil and gas infrastructure and energy generation and you are all complaing about Darfur in Sudan! I think it is because China has spoiled your business of importing fake drugs and sundry that is the real issue! The Chinese people are good people, we have a lot to learn from them. What wwere Nnamdi Azikiwe and Awolowo doing when Mao Tse-Tung was laying the foundation for a strong China? Make una try think straight small. We have a lot to gain from the Chinese. You can only acquire technology, if you open yourselves to learn and educate your children well. thank you. Obiagu Odumegu