The International Monetary Fund (IMF) has raised concerns that China’s slowing economic growth could have repercussions on Nigeria’s economic prospects. China’s deep economic ties with sub-Saharan African countries, including Nigeria, may lead to an average decline of 0.5 percentage points in Nigeria’s growth due to China’s recent economic slowdown, the IMF revealed.
China is the largest single-country trading partner in the sub-Saharan Africa region, accounting for one-fifth of its exports, including metals, minerals, and fuel. Additionally, China is a major supplier of manufactured goods and machinery to the region. The IMF emphasized that China’s recovery from the pandemic, currently experiencing a slowdown due to a property downturn and reduced global demand for its manufactured goods, will impact Africa.
In a post titled “China’s Slowing Economy Will Hit Sub-Saharan Africa’s Growth,” the IMF highlighted that a one percentage point decline in China’s growth rate could reduce average growth in the region by about 0.25 percentage points within a year. For oil-exporting countries like Nigeria and Angola, the potential loss could be 0.5 percentage points on average.
The IMF noted that the effects of China’s economic slowdown extend to sovereign lending to sub-Saharan Africa, which fell below $1 billion last year, marking the lowest level in nearly two decades. This decline signals a departure from substantial infrastructure financing. Sub-Saharan African countries, particularly Angola, Cameroon, Kenya, Nigeria, and Zambia, where China is the largest bilateral official lender, are expected to feel the impact of reduced lending.
To mitigate the effects of China’s economic slowdown, the IMF suggested that sub-Saharan African countries should focus on building resilience through increased intra-African trade, strengthening buffers through tax policy reforms and revenue administration improvements, and diversifying their economies. Efforts to diversify economies, create favorable business environments, invest in infrastructure, and deepen domestic financial markets were also emphasized.
In recent trade data, the Consul General of China in Lagos, Yan Yuging, highlighted that the bilateral trade volume between China and Nigeria for the first three quarters of 2023 reached $17.25 billion. Despite this, the IMF’s warnings underscore the need for African nations to adapt to China’s changing economic dynamics to sustain growth.
