CHINESE INVESTMENT IMPACT ON MANUFACTURE SECTOR GROWTH AND SOCIO-ECONOMIC DEVELOPMENT IN DEVELOPING AFRICAN COUNTRIES: A CASE STUDY OF THE LEKKI FREE ECONOMIC ZONE IN LAGOS, NIGERIA.

Since China joined the World Trade Organisation in early 2000s, many did not predict that China will become an important player in fostering the process of globalisation. The emergence of Chinese investment around the world, particularly in developing African countries was driven by the government of China’s ‘go global’ policies. Previous relevant studies suggest that the influence of China is rising in Africa. This is backed by trade and investment data for Nigeria, which indicates an upward trend. This study was motivated by the limited empirical studies on the effect of Chinese investment on growth of individual African countries. The critical examination of literature using the Lekki free economic zone case study indicates that Chinese investment in Nigeria’s manufacturing is expanding and for long-term purposes. Thus, the purpose of this study is to investigate the impact of Chinese investment on manufacture growth in Nigeria.

To complement the macro-level investigation, this study examines the socio-economic effect of Chinese investment at local level using the case study of the Lekki free economic zone project. To achieve these aims, this study revisits previous empirical research on this phenomenon and identifies a gap regarding the use of mixed research methodology under the pragmatic research paradigm. While this is changing, it remains limited in the FDI literature. Secondary data collected for individual indicator in this study covers the period 2003-2017. Primary data was limited to seven semi-structured interviews conducted in 2019. Each data type was analysed individually, then findings from both were integrated according to the sequential explanatory mixed method design.

Quantitative findings show that Chinese investment does not exert positive and significant influence on manufacture sector growth in Nigeria. This result was found to be robust after controlling for the factor intensity of the manufacturing sectors in the sample. This means that Chinese investment was found to have no positive and significant effect on the growth of labour-intensive, as well as capital-intensive manufacturing in Nigeria. Nigerian domestic capital shows a positive and significant relationship contributing on average 0.69 percent to growth with 1 percent increase in domestic capital irrespective of the factor-intensity in the manufacture sector of Nigeria. Qualitative findings, through content analysis and semi-structured interview shows that Chinese investment is significantly market-seeking in Nigeria. Although, the employment generation-effect of Chinese investment and its contribution to socio-economic development could not be overruled, content analysis shows that some policy incentives at the Lekki free economic zone counteracts the expansion of manufacturing sector, thereby job creation is limited. In the long-run, Chinese investment will not help the realization of the sustainable development goals in Nigeria.

This study made contributions in two ways. Theoretically, this study argued that growth in labour-intensive manufacturing sector is critical for industrialisation in Nigeria. Domestic capital rather than foreign investment in the labour-intensive manufacturing is important to initiate the big-push industrialisation in Nigeria. Empirically, this study has extended the overall understanding of Chinese investment in Nigeria, as well as closing the gap on the use of mixed methodology in economic research.