Strategic Alliance: America or China


Nigeria is a leading country in Africa. More high-level intellectual capital is reposed in Nigerians than any other country on the continent. This include doctors, engineers, scientists, finance experts, management experts and professors deeply engaged and working in advanced western countries. As the most populous African country, Nigeria holds a high potential for leading the economic emancipation of the continent. However, Nigeria needs a massive infusion of financial capital to play the leading role, it potentially can. This essay explores how Nigeria can leverage the strategic interest of America to attract that inflow.

Clearly, governance is a leading indicator of attractiveness and the essay presents an analysis that is devoid of the impact of the quality of governance in Nigeria. In essence, it is governance quality neutral and follows evidence from South Korea, Taiwan, Singapore, China and Saudi Arabia, countries where for strategic reasons, America invested massively at a time, when none was a liberal free market democracy. In essence, it is a fact, that America makes investments that further its strategic interest, across time dimensions.

After World War II, America invested massively in Western Europe and Japan and created a global trade and governance system, designed to limit the possibility of another horrifying world war. America understood that shared prosperity had to be the fulcrum for peace among countries that had the technological capacity to make and use weapons of mass destruction and that its leadership was essential to make a system limiting their use stick. America has since wielded the leadership with great success!

Capitalism and communism are the two greatest philosophies that have shaped global political and ultimately, economic systems and standards of living, in the last 200 years. Capitalism a western philosophy, is posited on competition and innovation based on the individual ownership of the means of production. Communism the polar opposite that is based on the communal ownership of the means of production and the sharing of output and extended into an economic system, severely limits competition, innovation and creativity and stifles economic growth as witnessed in the defunct Soviet Union and communist China’s decision to run a capitalist style economic system.

America shed precious blood and treasure to fight off communism in South East Asia and to prevent countries in this region from falling like dominoes into communism, given the experience of China under Mao and the determination of the defunct Soviet Union to spread the philosophy in this region. This included massive financial, managerial and other resource investments in Singapore, South Korea and Taiwan as well as precious blood in countries like Vietnam, Cambodia and Laos during the Vietnam War.

More recently, America has invested trillions of dollars and again shed precious blood into defeating Islamic extremism in the form of Al Qaeda and Islamic State. In essence, America has over-and-over, demonstrated, a profound commitment to the maintaining of its way of life and by so doing improved the welfare of people all over the world. Understanding the nature and characteristics of this commitment has important significance for Nigeria, if it wishes to attract a heavy infusion of western capital and resources into its economy.

On the other side, is Nigeria itself. The indigenisation decree of the early 1970’s, an unenviable record of military takeovers and the willingness of military dictators to use authoritarian methods to subjugate people without significant internal opposition can be construed as negative signals. However, Nigeria is a free market democracy and the human capital leader of a continent with an abundance of the strategic metals and minerals that enable the modern electronic driven digital economy.

These resources include cadmium, zinc, copper, bauxite alumina and potentially huge deposits of rare earth minerals – and are central to the innovation and productivity that is the base of the modern industrial economy and jobs in advanced economies. The rise of China as an economic power has increased demand and competition for these minerals and metals, as the country works to increase purchasing power and standard of living of at least 400 million poor Chinese.

Built on a politically communist system, China is now well on the way to creating parallel institutions and global trade and investment rules that challenge the system of trade and institutional governance rules – the Bretton Woods system – crafted by America and its allies after World War II. China has also emerged as a significant challenge to the economic dominance of America and other western democracies in Africa.

Increasing global purchasing power in a manner that America businesses can capture is a viable solution to the pressure on wages that has challenged America’s labour and working class over the last 25 years. With over 900 million needy people with pent up demand, Africa is clearly the market with the most catching up to do but over the last 20 years, China has built a huge presence on the continent.

This has two effects: One, China may capture a disproportionate amount of any increase in purchasing power from American investment relative to the actual financial and managerial investment China has made on the continent and two, African countries, primarily Nigeria, may replace America and western democracies in the use of African resources in making intermediate goods. Either outcome could result in major job losses in America and the economies of its main strategic partners.

Nigeria has to convince America that working with Nigeria to facilitate a massive inflow of capital and managerial expertise will create American jobs and is in its geopolitical strategic interest. The work of exiled members of the National Democratic Coalition (NADECO) after the annulment of the June 12,, 2001 election and during the regime of General Abacha, demonstrates a capability to be successful in lobbying Washington DC for mutual advantage.

That effort led to a new constitution, the elections and the emergence of Olusegun Obasanjo as president. Indirectly, it eased the entry of global telecommunications firms into the country subsequent to commitments made to facilitate trade in telecommunication services after the completion of the Uruguay round of World Trade Organisation negotiations. The transition to civilian rule also created the political framework for negotiations that led to the forgiveness of $20 billion of sovereign foreign debts by the Paris of major creditor nations and the London Club of private creditors in 2005.

The telecommunications revolution had a profound impact on the ease of doing business and was central to revising GDP from N42.4 trillion to N80.2 trillion ($509 billion) in 2013. The low debt to GDP ratio resulting from the forgiveness of sovereign debts is supportive of raising Eurobonds, attracting Foreign Direct Investment and job creation.

Lobbying Washington DC is a daunting proposition. Is there an alternative?
Ijose wrote from the United States of America.



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