Nigeria Courts Chinese Investors: A New Era for Oil, Gas, and Beyond

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Nigeria is actively seeking Chinese investment, establishing a dedicated office to facilitate partnerships following President Bola Tinubu’s visit to Beijing for the Forum on China-Africa Cooperation. Since that visit, over 200 Chinese companies, particularly in the oil and gas sector, have shown interest in investing. This move aims to enhance Nigeria’s infrastructure and diversify its economy, addressing the significant underfunding that has reduced oil production.

Despite China’s proximity to alternative oil sources, its interest in Nigeria is fueled by broader opportunities, including infrastructure projects and access to a large consumer market. Nigeria, with over 227 million people, is Africa’s largest economy and consumer market, attracting Chinese engineering firms.

Concerns over a significant trade imbalance favouring China are prompting Nigeria to push for value-added exports rather than just raw materials. Recent investments include a lithium processing plant and a USD 7.9 billion green hydrogen project.

In 2023, Nigeria’s crude oil exports totalled USD 43.5 billion, with minimal exports to China, which largely imports manufactured goods. China’s investment aims not only to address trade imbalances but also to leverage Nigeria’s industrial capabilities and consumer market.

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Nigeria, the largest economy in West Africa, has a huge infrastructure deficit and has had to turn to China to fund the upgrade of its oil and gas facilities, and construction of railway lines, highways and ports. Crude petroleum and gas exports account for more than 85 per cent of the country’s total exports but because of underfunding, production dropped from a high of 2 million barrels a day in the 1980s to about 1.5 million in recent years.