TRADE between sub-Saharan Africa (Nigeria and others) and China has skyrocketed 40-fold since China’s share of African exports surged from 1.6 per cent in 1995 to 16.5 per cent in 2015 and imports jumped from 2.5 per cent to 23.2 per cent over the same period, according to the International Monetary Fund‘s Annual Report 2017.
However, trade slowed in 2015, when the value of African exports to China stood at US$48 billion, having fallen from $105 billion in 2014, representing a decline of 54.29 per cent, reported THISDAY, a Lagos daily.
The IMF report noted that China’s rapid growth had boosted its demand for raw materials, many of which came from Africa, which led to the massive growth in the 20-year period.
The fund, however, pointed out that, currently, China’s growth was slowing with the drivers of its growth shifting from investment and exports to domestic consumption, a process referred to as “rebalancing”.
According to the Bretton Woods institution, “a recent analysis prepared by the IMF shows that this shift had a particularly big impact on commodity exporters, many of which are in Africa: in 2015, the value of African exports to China fell to $48 billion from $105 billion in 2014, putting pressure on exchange rates and foreign exchange reserves.
“Sharply lower government revenue in commodity-intensive countries has forced them to cut public spending, including on badly needed infrastructure and social services. The short-term pain is acute.”
Stating that, “not all the news is bad, though”, the IMF noted that, “looking for more opportunities abroad, Chinese enterprises and financial institutions have expanded their direct investment and lending in Africa, notably in non-resource-intensive countries, which continue to enjoy high growth.”
“Ever the medium term, this investment offers opportunities to sub-Saharan Africa to become part of global value chains, boosting much-needed structural transformation on the continent,” the fund reasoned.
“Every cloud has a silver lining,” said coauthor of the IMF analysis, Roger Nord. “While falling commodity prices hurt Africa in the short term, China’s shift to more consumption is an opportunity for Africa to accelerate its much-needed structural transformation.”