The International Monetary Fund (IMF) has issued a cautionary statement, highlighting the potential impact of China’s economic slowdown on Sub-Saharan African economies, particularly Nigeria. The IMF contends that a 1%-point decline in growth in Nigeria could result in an average loss of 0.5%-point.
In its warning, the IMF emphasizes China’s significance as the largest trading partner for Sub-Saharan Africa, responsible for purchasing one-fifth of the region’s exports. The slowdown in China’s economic growth, therefore, poses a significant risk to the entire region.
Over the past two decades, China has forged extensive economic ties with Sub-Saharan African countries, emerging as the region’s leading single-country trading partner. The majority of manufactured goods and machinery procured by African nations come from China, with China also being a major buyer of the region’s exports, including metals, minerals, and petroleum.
The IMF experts express concern that the global economic slowdown, coupled with China’s manufacturing sector’s deceleration, has impeded recovery from the pandemic. They estimate that a 1% decline in China’s growth rate could reduce average growth in the Sub-Saharan African region by approximately 0.25 percentage points within a year. For oil-exporting nations like Angola and Nigeria, the potential loss could be 0.5 percentage points on average.
Nigeria, in particular, has felt the effects, with its real Gross Domestic Product (GDP) experiencing a growth rate of 2.51% in the second quarter of 2023, lower than the 3.54% recorded in the same quarter of the previous year. Additionally, China is Nigeria’s top trading partner, accounting for 22.17% of the country’s total imports.
The data reveals that in the second half of 2023, Nigeria imported goods worth N1.27 trillion from China. Furthermore, Nigeria’s debt to China increased by $800 million, from $3.93 billion as of June 30, 2022, to $4.73 billion as of June 30, 2023.
China’s economic slowdown has also affected its lending to Sub-Saharan African countries, falling below $1 billion last year—a notable decline from previous years. The IMF suggests that African nations must adapt to China’s changing economic landscape by boosting intra-African trade, strengthening reserves through tax reforms, and diversifying their economies. The emphasis is on creating favorable business environments, investing in infrastructure, and deepening domestic financial markets to enhance competitiveness and sustain future growth.
