The Belt and Road Initiative (BRI) underscores China’s ambitious efforts to redirect the country’s capital and resources outside its own borders to capitalize on investment opportunities and forge economic cooperation. With the promise of disrupting the US-dominated maritime-trade status quo, China has eagerly approached countries with infrastructure development projects and the accompanying financing.

China has leveraged its role as the world’s largest creditor to expand its influence in developing countries through the BRI, harnessing extensive trade and infrastructure experience. Nigeria has been a noteworthy beneficiary of this expansive project, even after decades of economic cooperation between the two countries. China has been instrumental in extensive infrastructure projects throughout Nigeria, building rail lines crisscrossing the country, constructing new international terminals at some of the country’s airports, and even participating in agricultural endeavors.

President Muhammadu Buhari has eagerly highlighted the positive relationship with China, dismissing critics who paint it as a debt trap by pointing toward the real progress made in vital areas of the economy. Transportation and trade infrastructure upgrades, especially for seaports and airports, will inevitable help ease foreign access to Nigeria. Although the exact figures of annual Chinese foreign direct investment in Nigeria are difficult to pin down, trade between the two countries is significant, with imports from China amounting to US$8.35 billion in 2018 alone.

Nevertheless, there are some strains in the apparently close relationship. The BRI itself has been plagued by controversies that paint it as predatory practices disguised as economic empowerment. Moreover, many Chinese imports are displacing local industries, creating tension with the local Nigerian business community. While it is hard to ignore Chinese infrastructure contributions that have been especially valuable for transitioning Nigeria away from its dependency on natural-resources mining and exports, China’s business presence faces mounting risks as political uncertainty prevails.

Nigerian politics raises the stakes

Although it is technically Africa’s largest democracy, Nigeria’s government has long been mired in corrupt bureaucracy. This status quo creates significant risks for foreign investment, and especially Chinese firms seeking to enter Africa’s biggest economy. The situation was exacerbated when Washington enacted a ban on specific Nigerian government officials entering the US after allegations of electoral malfeasance.

The decision was likely aimed at politicians who were observed using their influence undermine elections or spark violence. Nigeria’s elections have long been marred by violence, but more disconcerting are the more recent malign efforts allegedly undertaken by the opposition People’s Democratic Party. Seeking to sow discontent and embarrass Buhari, the PDP undertook subversive espionage efforts against the sitting president.

Apart from the glaring questions that these motivations raise, foreign investors are keener to invest in  emerging markets that are run by stable governments. These maligning and destabilizing political espionage activities invariably sow mistrust, harming foreign perceptions of Nigeria’s political solidity.

While the results of the February election have finally been resolved by a tribunal overseeing the last stage of the process, accusations of bribery, corruption, fraud and violence are still being traded by both parties, heightening the sense of political uncertainty. More important, political infighting dragging on well into the future could cause China to reconsider its investment stance.

Despite Buhari’s victory and his strong relationship with Chinese President Xi Jinping, his political rival Atiku Abubakar has previously pounced on the lack of conditions accompanying China’s loans. Believing these loans are ripe for misappropriation, Abubakar’s popularity combined with the scrutiny of these investment initiatives is likely viewed with consternation among Chinese businesses operating in the region.

Moreover, the shady opposition tactics that primarily were aimed at delegitimizing the Buhari government create the sense that the rule of law is no obstacle for those who wish to abuse the system. For investors, these developments reflect risks that cannot be ignored. Should legal and publicity challenges to the legitimacy of the current government persist, it could risk plunging the entire country into conflict, as past electoral violence suggests.

As evidenced by the recent protests that were promptly quashed by the government, discontent is spreading through Nigeria. Leading pro-democracy activist and former presidential candidate Omoyele Sowore, who organized #RevolutionNow protests across the country, has since been imprisoned for his role. Meanwhile, planned protests and marches were stymied and dispersed by government security forces, stopping the effort in its tracks. Despite the failure, it still highlights the growing degree of discord and political instability gradually enveloping the nation.

This backlash has not only found its way into the political arena, but also into the economic sphere. Many locals accuse Chinese companies of unfair practices including displacing local businesses, contributing to unemployment, and failing to create meaningful jobs despite the immense investments being made by Chinese companies. Furthermore, they cite Chinese foreign workers sending funds back to their homeland instead of reinvesting in the local economy, darkening the situation even further.

A recent spate of kidnappings also underscores the risks that Chinese workers themselves face in Nigeria. Whether a byproduct of instability in certain regions, like the Boko Haram insurgency or attacks against energy infrastructure in the southern part of the country, these kidnappings are often politicized to avenge perceived grievances or extract monetary gains.

The growing risks of such incidents create serious challenges for Chinese firms seeking to recruit Chinese nationals to work in their various projects around Nigeria. While profit motivations underpin any risk Chinese investors are willing to accept, any worsening of Nigerian violence and political volatility could be a red flag for future collaboration.

Risk overtaking reward potential?

Though China needs to redirect its own domestic excess capacity, a feat that is in part being accomplished through the BRI, there is still the question as to what amounts to too much risk. Already, BRI projects in other countries have been scrapped, and the local instability traversing Nigeria does not necessarily bode well for future foreign direct investment. An increasingly fragmented political environment coupled with local resentment of Chinese firms could presage even greater blowback and amount to increased violence.

The disputed election results, apart from deepening societal fractures, mean that the Nigerian government will be forced to defend itself in lieu of upgrading the security apparatus that should be guarding the country’s economic interests. As one of the fastest-growing African populations, Nigeria’s current government must do more to improve the security situation if it shows any hope of attracting foreign capital to support more infrastructure development and economic empowerment.

Moreover, if Nigeria is to attract even greater sums of foreign capital, more must be done to reverse the prevalence of corruption throughout all ranks of government. If foreign investors view risk as outweighing reward, Nigeria might very well find itself exhausting its accumulated Chinese political capital, making it more difficult for the country to appeal for more financial capital to pay its rapidly growing debts.