From Competitors to Trading Partners
Africans Adjust As Business Ties With China Grow

By Craig Timberg
Washington Post Foreign Service
Sunday, December 3, 2006

KANO, Nigeria -- The pasta factory that Umar Sani Marshall's family owns on the outskirts of this ancient city had not churned out so much as a single piece of macaroni in more than a year. The other former titans among Kano's once-mighty manufacturers were doing no better, producing mostly cobwebs as the city's markets overflowed with cheap imports from China.

So last month Marshall, 30, tall and wiry with rectangular, silver-framed glasses and a goatee, decided to forsake his legacy as scion of one of Nigeria's leading industrial families. He strapped $5,000 to his waist and flew off to Asia in search of a new kind of fortune, built not on making goods but trading them.

By the time he returned 12 days later, Marshall had started a new business dealing cars and auto parts, as a middleman between Chinese suppliers and Nigerian consumers. Along the way, he said, he found the kinds of profits that long have eluded Kano's manufacturers, and he learned a few lessons about how to work with Chinese businesses instead of competing against them.

"When you go there with the intention of buying socks, you will come back with a jacket and hat" as well, Marshall said, smiling as he pretended to place a top hat on his head.

His shift, from manufacturing to trading, mirrors a broader one across Nigeria and much of Africa. A 30-year experiment in building local factory capacity has faltered with declining trade barriers and rising global competition, most powerfully from China. African business leaders increasingly are staking their fortunes on old-fashioned extractive industries, such as oil production needed to fuel Asian industry, while also attempting to profit from the flood of finished goods coming in return.

Although the model stirs memories of the kind of economic relationships once common between European powers and their vassal states here, Africans say the Chinese at least treat them as equals and invest in infrastructure projects key to the continent's future.

At a recent trade summit in Beijing, officials from 48 African nations met with Chinese leaders, who promised to double aid to Africa while offering $5 billion in new loans. Already Chinese firms have built dams, roads, railways, port upgrades, mining facilities and telecommunication systems in Africa.

A Chinese company at the summit announced an $8.3 billion project to build a railway connecting Kano to the port city of Lagos. It will be paid for out of Nigeria's oil revenue, which is burgeoning in part because of rising Chinese demand. Overall, Africa's trade with China rose from $10.6 billon in 2000 to almost $40 billion last year. Projections are that it could reach $100 billion by 2010.

Signs of China's growing prominence on the continent are easy to spot in Kano, a bustling, thousand-year-old city of 3.5 million people that long was a regular stopover for trade flowing through the Sahara, whose sandy southern edge is nearby. Now the city's gaze has shifted to the Far East, with Chinese restaurants spreading across the city, Chinese goods filling shops and a Chinese-owned shoe factory employing more than 2,000 workers, more than any other private employer in northern Nigeria.

A decade ago, the Marshall family's shortcake factory had a similar number of workers and a powerful market position throughout northern Nigeria and into neighboring Cameroon, Niger and beyond. It is now closed, along with the family's pasta factory, victims not so much of competition as of government policies that made it difficult to import durum semolina, a key ingredient, Marshall said.

Business leaders here say the decline of Kano's manufacturers resulted from an influx of Chinese products as trade restrictions fell. Chinese companies had more modern machinery, more reliable sources of electricity and easier access to capital, said Saidu Dattijo Adhama, owner of a textile factory whose payroll has dropped from 335 workers to 24. The raw cotton produced by Chinese farmers, meanwhile, was stronger and yielded more fabric per pound.

"Without a little protection, if the Chinese bring their finished cotton to Nigeria, you cannot compete with them," Adhama said. "The gap is so wide that if you just allow them to come in, you are killing Nigerian companies."

Fifteen years ago, 500 factories hummed with work in Kano, but fewer than 100 remain operational today, most at far less than full capacity, according to the city's Chamber of Commerce. Tens of thousands of jobs have been lost. Meanwhile, Kano's Kwari textile market, the biggest in West Africa, has swelled with stall after stall of Chinese fabrics and clothing.

Liti Kulkul, former chairman of the textile traders association here, estimated that a decade ago, 80 percent of the fabric sold at Kwari was made in Nigeria, compared with 5 percent now. Asian products, mostly from China, make up the rest.

"We have taken this path of neocolonialism," Kulkul said. "They have virtually crippled all aspects of our economy."

Yet others see China not as the ruin of Kano business but as a transformative force pushing the city back to its roots in trading. Beyond Kulkul's stall, which specialized in the colorful Nigerian prints long produced by local textile mills, the market buzzed with dealmaking.

Rows of shops overflowed with Asian-made air conditioners, televisions and DVD players. Beyond them, Kano's noisy, smoggy streets were jammed from curb to curb with Chinese-made motorcycle taxis that largely have replaced the aging stock of Italian-made Vespas, which cost three times more.

Chinese business "revived the economy," said Ahmed Rabiu, deputy president of the Chamber of Commerce. "Trading improved. Manufacturing went down. That's it."

Not everyone in Kano applauds the change. The motorcycle taxi drivers earn less than factory workers once did. And the growth in trade has not absorbed most of the workers laid off in the past decade. There are more beggars and other visible signs of poverty than ever before, residents say.

"We are very bitter that the factory closed down," said Ibrahim Garba, 50, who worked for the Marshall family's pasta factory for 25 years, earning enough to support his two wives, six children and six grandchildren.

Now, instead of going to the factory, where he operated a generator, he farms five dusty acres of corn, beans and millet, most of which he uses to feed his family, not to earn money. His income has plunged from about $50 to about $15 a month, Garba said.

But Marshall, with the education, capital and savvy to adjust to Kano's shifting business climate, is not complaining.

He met with Chinese businessmen in Singapore and quickly spent the $5,000 he brought and $15,000 more he had kept in reserve in Nigeria. In return, he got four used Honda cars and 1 1/2 shipping containers full of car parts. Used automotive products here are known as "Belgium" for the traditional source of many of them, but now most Belgium comes from Asia.

Marshall calculates that he can sell the cars and auto parts for $34,000, a profit of 70 percent on his investment.

"I'm going back next month, inshallah!" Marshall said, using a common phrase in the Muslim world that means "God willing." "More opportunity is coming."

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