The International Monetary Fund (IMF) has revealed that China’s slowing economic growth is likely to affect Nigeria’s economic fortunes. As China has established deep economic ties with countries in sub-Saharan Africa over the past two decades, the recent decline in China’s growth may have a significant impact on Nigeria, reducing its growth by an average of 0.5 percentage points. China is the region’s largest single-country trading partner, purchasing one-fifth of the region’s exports, including metals, minerals, and fuel, and supplying most of the manufactured goods and machinery imported into the region.
According to the IMF, a one-percentage-point decline in China’s growth rate could reduce the average growth in sub-Saharan Africa by about 0.25 percentage points within a year. For oil-exporting countries such as Angola and Nigeria, the impact could be even more substantial, with an average loss of 0.5 percentage points. The recent slowdown in China’s recovery from the pandemic, attributed to a property downturn and weakening demand for manufactured goods amid global economic slowdown, has raised concerns about its repercussions for African economies.
The IMF also highlighted a decline in sovereign lending to sub-Saharan Africa by China, falling below $1 billion last year, the lowest level in nearly two decades. This reduction signals a departure from significant infrastructure financing by China in the region. The IMF suggests that African countries need to adapt to China’s growth slowdown and declining economic engagements by increasing intra-African trade, enhancing resilience through tax policy reforms, and improving revenue administration. Diversifying economies and exploring opportunities in renewable energy development could also contribute to sustaining growth in African countries.
Despite these challenges, the Consul General of China in Lagos recently reported a bilateral trade volume of $17.25 billion between China and Nigeria in the first three quarters of 2023. The total borrowing from China by Nigeria reached $4.29 billion at the end of December 2022, according to data from the Debt Management Office.