Last year, Australians reported more than A$634 million lost to fraud, a significant jump from $489.7 million the year before.
The Australian Competition and Consumer Commission (ACCC) has released its latest annual Targeting Scams report.
But despite increased awareness, scam alerts and targeted education campaigns, more Australians are being targeted than ever before.
With all the technological tools we have, why does fraud continue to be so pervasive? And how can the damage be reduced?
Latest key findings
According to the ACCC’s report, “business email compromise” fraud rose to dominance in 2019.
At $132 million, it became the highest category of financial loss reported – the first time this has happened. This usually involves using phishing and hacking to infiltrate company systems and email accounts.
Offenders can intercept payment invoices, or create their own, and funnel victims’ funds into their own accounts. Businesses and individuals make their payments as usual, but unknowingly pay the offender.
Investment and romance schemes also continue to defraud victims. Reports of investment fraud totalled $126 million, up from $80 million in 2018. And romance fraud losses totalled $83 million, up from $60.5 million in 2018.
Overall, men reported higher financial losses ($77.5 million) than women ($63.6 million).
Years of statistics
Reflecting on a decade of the ACCC’s Targeting Scams reports, we can see how fraud has changed with the times.
Since the first report in 2009 (which recorded $69.9 million in losses) Australians have collectively reported more than $2.5 billion in losses.
The number of reports has increased significantly. While this likely reflects a higher percentage of the population being targeted, it also represents more authorities receiving complaints and contributing statistics.
For instance, 2019 marked the first year the big four Australian banks (Westpac, NAB, Commonwealth Bank and ANZ) contributed their data.
The ‘prince of Nigeria’ needs your help
These days, victims are most often contacted by telephone, although email, text message and social media communications are also common.
Payment methods have advanced, too, with bitcoin and cryptocurrencies becoming popular ways for offenders to receive money.
Why is fraud still so successful?
While technology has long helped scammers, it has also helped improve cyber security options such as antivirus software, and email filters to block spam. So why do we still have fraud?
Essentially, fraud takes a human approach. Criminals seek to capitalise on victims’ weaknesses in a calculated manner. For example, this year Australians looking to buy pets during lockdown lost almost $300,000 to puppy scams.
Offenders have also shifted their focus to counteract fraud prevention messages to the public from police and other agencies. One prime example is the Little Black Book of Scams released by the ACCC in 2008.
To counter prevention messaging, offenders now recruit Australians to launder their funds. Known as “money mules”, they are often victims themselves, asked to receive and transfer money on behalf of offenders.
From a victim’s perspective, there are fewer red flags when asked to send money to a Big Four bank account in Melbourne, compared to sending money to Lagos.
Similarly, since there has been a strong push against sending money to people you don’t know, offenders have embraced the use of romance fraud (which targeted more women than men in 2019).
Offenders develop relationships and build trust to eventually cheat victims. And as last year’s report notes, they are now initiating relationships through channels other than dating apps, such as Instagram and even the online game Words with Friends.
With a focus on building relationships with victims, fraud requests are no longer as outrageous as they once were (although this Nigerian astronaut scam was an exception).
Manipulation and monopolising on emotions
As we gain a better understanding of how offenders operate, we’re starting to learn how effectively victims can be persuaded.
Fraud relies on the use of social engineering techniques such as authority and urgency to gain compliance. Offenders often take on the identity of someone with power and status to persuade victims to send money. They also stress the urgency of the request, to stop victims from thinking too much.
Psychological abuse techniques are also used to isolate and monopolise on victims. In this way, offenders try to remove victims from their support networks and place an air of secrecy around their interactions. And this limits a victims ability to seek support when needed.
There has been a greater recognition of the problem across government and industry. Despite this, there’s still often a sense of shame and embarrassment at being deceived, and victims have difficulty reporting.
Defences for the future
The latest Targeting Scams report shows us offenders are still looking to gain a financial advantage, and will do whatever it takes. While you can’t guarantee safety, there are some simple steps that can help reduce the likelihood of fraud:
recognise your own vulnerability to fraud. Everyone is a potential target.
talk about fraud-related experiences with family and friends in a non-judgemental way. Offenders want victims to stay silent.
in an uncertain situation, don’t feel pressured to xfrespond, as offenders rely on people making quick decisions. Hang up the phone, delete the email, or simply step back.
Now, more than ever, we must recognise the prevalence of fraud and the ways it impacts individuals and organisations across society. If we can learn from the past decade, maybe we can improve our defences for the next decade.
The Nigerian Government has revealed plans to end the monopoly enjoyed by cable television service providers, especially Digital Satellite Television, owned by MultiChoice, a South Africa-based company.
The plan is said to include ending exclusive rights to sporting events.
Only DStv currently broadcasts major football competitions in Nigeria, especially the English Premier League.
The government said it had amended Nigeria’s broadcasting code to prevent DStv and others from monopolising their channels and contents.
The House has been probing DStv for allegedly cheating its Nigerian subscribers by restricting them to prepaid plans and increasing its subscription rates on June 1, 2020, despite the economic impact of COVID-19 pandemic lockdown on the people.
At the continuation of the investigative hearings organised by an ad hoc committee of the House on the matter in Abuja on Tuesday, Minister of Information and Culture, Alhaji Lai Mohammed, had dismissed claims by DStv that pay-per-view was not proper for the Nigerian market.
Mohammed noted that StarTimes, the cable arm of the Nigerian Television Authority, was already operating for some years.
In an audio recording obtained by our correspondent, Mohammed could be heard responding to questions from the lawmakers.
The minister said, “On the issue of increase in price for subscribers, with the onset of COVID-19, one of the first things we did in the ministry with the NBC (National Broadcasting Commission) was to provide succour to broadcasters.
“We suspended payment for the initial two months to all broadcasters so that they would be able to absorb the impact of COVID-19. Therefore, it will be unfair for those for whom we have suspended payment to also at the same time increase their own fees. And I’m sure that the DG of NBC will take up this matter.”
On the issue of monopoly, Mohammed stated that the President, Major General Muhammadu Buhari (retd.), had in 2019 set up a board of enquiry to look into the activities of broadcasting stations, to ascertain the potency of the broadcasting code and broadcasting act to curtail and regulate the industry against excesses.
He added, “We took that opportunity also to make right recommendations to Mr President, including the breaking of the monopoly of the various giant operators. It is to the credit of Mr President that he did approve those recommendations.”
Mohammed noted that some recommendations would require that the National Assembly amend the provisions of the Nigeria Broadcasting Act.
The minister said, “You will notice, in recent weeks, a lot of attacks on the ministry as a result of these amendments. These amendments have actually struck at the heart of monopoly. These amendments are, for once, giving back to Nigerians their own industry.”
Earlier, Chairman of the committee, Mr Unyime Idem, asked Mohammed and the acting Director General of the NBC, Armstrong Idachaba, to order DStv to suspend its recent rates’ increment.
Mohammed immediately ordered the Idachaba to issue the notice.
Idem had stated that the minister and all stakeholders present should ensure and commence full implementation of its directives.
The House committee’s order included “a marching order to the service providers, particularly Multichoice’s DStv, to reverse the recent June 1, 2020 price hike and revert to the old price as this is not the best of times to increase the prices of services, no matter the reasons for such increase, taking into consideration the ravaging effect of COVID-19 on the economy of Nigerians.”
It added, “Come up with a robust strategy to break the monopoly and open up the industry for larger participation. PAYG regime for the digital TV broadcasting in Nigeria, with particular reference to DStv, GOtv, StarTimes and Kwese TV.
“Deregulation of content right by DTH (direct-to home), DTT (digital terrestrial television) and IPTV (Internet Protocol Television) operators. Encouraging local content participation through content sharing.”
Source: PUNCH NIGERIA.
The House of Representatives has begun an investigation of cable and satellite television service providers in Nigeria over their high tariffs and monopolised bouquets.
The House is specifically probing the Digital Satellite Television, a South Africa-based provider owned by MultiChoice, for allegedly cheating its Nigerian subscribers by restricting them to prepaid plans.
Members of the House had on March 17, 2020, took turns to criticise DSTV for refusing to introduce pay-per-view.
Consequently, the House had resolved to set up the committee to probe into the matter, with the mandate to invite Federal Government agencies regulating the industry, including the Federal Ministry of Communications and Digital Economy and the Nigerian Communications Commission.
Again on June 2, 2020, the House inaugurated an ad hoc committee to investigative the increment of subscription rates by Multichoice and other cable television service providers.
The committee, which the Speaker, Femi Gbajabiamila, constituted and inaugurated, assured Nigerians of justice and fairness, saying it would work towards making the providers to adopt ‘pay per view’ system.
Chairman of the committee, Unyime Idem, at an investigative hearing held in Abuja on Thursday, said the National Broadcasting Commission was summoned to explain why DSTV and other service providers have refused to introduce pay-per-view.
Idem said, “Today, we want to hear from you and your team, how the industry can be properly managed so that beneficiaries who are Nigerians can smile at the end of the day. I am sure you must have been hearing of the yearnings of Nigerians for years now, who are the subscribers to these services, that they are not happy with the current services they are getting from the providers.
“They have been crying on a daily basis that they are not satisfied with the services they are getting from the providers in terms of high charges, price hike and, most importantly, considering what is obtainable in other countries of the world, that is pay-per-view offer that other countries are giving to their subscribers.
“Why is it not implemented in Nigeria? We want to know your position as the regulator of this service providers. What are the bottlenecks? What are the constraints? What are the implications? Why are we not enjoying ‘pay as you go’ as subscribers to these service providers?”
Study shows Satellite TV reception increases by 23% in Nigeria and 19% in Ghana in 2019 since the last study, conducted two years ago; SES (www.SES.com) currently reaches 35 million TV households across the African Continent.
SES, the leader in global content connectivity solutions, has unveiled the results of its annual Satellite Monitor survey, which reveals a steady increase in the penetration of satellite TV across Africa. The study on TV reception also shows an increase in SES reach from 33 million African households in 2018 to 35 million households in 2019.
In Nigeria, the Satellite Monitor results revealed that satellite TV reception was the choice for 11.8 million households in 2019, a 23% increase compared to 2017, and a further 4.7 million in Ghana, up by 19% from 2017. The study also highlighted that High Definition (HD) TV sets are becoming increasingly popular, already present in approximately 50% of Ghanaian and Nigerian TV homes.
Other TV reception modes in Nigeria and Ghana currently include terrestrial, cable and IPTV. According to the latest survey results, satellite TV is steadily gaining popularity as the TV reception mode of choice in both markets, with 70% of TV homes in Ghana and 33% of those in Nigeria opting for satellite in 2019 – an increase from 64% and 27%, respectively, compared to 2017.
TV reception modes (in million homes)
TV reception modes
(in million homes)
TV reception modes
(in million homes)
The Satellite Monitor results show that SES also increased its reach across the broader African continent. In addition to the growth of homes reached in Nigeria and Ghana, the study shows that SES’s satellites reach 11.6 million homes (satellite and terrestrial) in anglophone West Africa; 6.2 million satellite homes in francophone West Africa; 17.7 million homes (satellite and terrestrial) in sub-Saharan Africa; and 0.9 million satellite homes in East Africa.
“The results of our annual Satellite Monitor market research demonstrate that satellite continues to be the optimal infrastructure to deliver hundreds of TV channels and in high picture quality too, while offering an affordable solution in the transition from analogue to digital TV,” said Clint Brown, Vice President of Sales and Market Development for SES Video in Africa. “With the deadline for the analogue switch-off looming in both countries – 2020 in Ghana and 2021 in Nigeria – the 2019 Satellite Monitor findings confirm that end consumers in regions going through digital migration are satisfied with satellite TV and choosing it for its better value proposition and variety of free-to-air offerings, rather than purchasing new hardware and switching to digital terrestrial TV.”
This SES annual market research offers a comprehensive and in-depth analysis into the TV market in each country it surveys and is designed to assess the development of TV reception modes and SES’s total reach in the market, as well as to serve as a benchmark for the TV and satellite industry. In 2019, Ghana and Nigeria were the main surveyed African countries as they stand as the most dynamic and highly penetrated TV markets in sub-Saharan Africa and have been surveyed by SES since 2015.
Six years ago, a cashless policy became fully operational in Nigeria. The aim was to encourage electronic transactions with a view to reducing the amount of physical cash in the economy. The logic was that this would minimise the risk of cash-related crimes.
But a major downside of the policy has been pervasive electronic banking fraud (e-fraud). Although the cashless banking system was designed to foster transparency, curb corruption and drive financial inclusion, it’s threatened by the growing perpetration of fraud.
About N15.5 billion was lost to bank fraud in 2018. About 60% of the fraud was perpetrated online owing to available internet-based and tech-rated banking services.
Our research investigated dimensions of electronic fraud in Nigeria. We found three: internal fraud carried out by banking staff; external fraud carried out by ordinary Nigerians; and collaboration between fraudsters and banking staff.
We found that inefficient supervision, non-performance of oversight by regional heads of banks, and poor follow-up on customers’ addresses (Know Your Customer) accounted for the fraud that took place.
Our study provides the banking industry, banking public and investors with critical pointers on how to reduce fraud.
Our study involved collecting data as well as conducting interviews with 30 people. These included victims of bank fraud, bank customers who did not subscribe to the cashless policy and fraud detectives at the Economic and Financial Crimes Commission (EFCC).
These were the common patterns we uncovered.
Insider fraud: By insider, we mean those working with banks or those in a relationship with account holders. Here, the fraud was exclusively executed by members of staff in the banking system who exploited the strategic position they held in the system and their grasp of how it works. Banking institutions and customers were their victims.
An example we came across during our research was the case of a N90 million (US$452,261) fraud perpetrated by an account officer of a major eatery in Lagos State. The job of this account officer was to collect the eatery’s takings and deposit them at the bank. A fraud detective told us that:
As the account officer he would collect money on a daily basis and was expected to credit the company’s account. However, he would collect money on Monday and lodge it and collect on Tuesday and not lodge it. He was missing one day out. He did this continuously until he was able to rake in N90 million. At this time, when the eatery management raised the alarm on their account, he ran away and could not be found. We however used his sister to arrest him. We were only able to recover N8 million naira from him. He had used part of the money to organise his wedding, had a baby and almost completed a four-bedroom bungalow at another area in Lagos.
Bank fraud is often successful because many Nigerians don’t subscribe to transaction alerts. The eatery management trusted their account officer but did not know that he was dishonest.
Outsider fraud: These perpetrators were external to the banking system. They thrived on their internet skills and sometimes on their understanding of the victims’ routine and identity.
An example we came across was the fraudulent use of bank verification numbers (BVN). These were made compulsory by the Central Bank of Nigeria in 2014. All bank account holders had to undertake biometric registration. The intention was to ensure security and check fraud.
But fraudsters have found a way to cheat the system by sending bank customers false emails asking for their bank verification details. As one victim explained to us:
I needed to make some transactions and I headed for my bank. I had called my account officer ahead of time. On getting to the bank, I connected my computer and got a mail from a supposed same bank. I was asked to click on a link and supply my BVN details for update of my account or face service suspension on the account. I just clicked the link and supplied my details and behold, N1 million debit alert came on my phone within five minutes! I was shocked and devastated but before we could do anything they had withdrawn everything.
Collaborative fraud: This involved collaboration between bank staff and fraudsters outside the banking system. Banks and individual account holders were the victims. For example, bank staff could provide account details of customers to the collaborating fraudster.
Despite this weak governance architecture, which is still not fraud proof, bank executives reported having in place mechanisms which had limited the incidence of fraud. One was sending out information to customers who subscribed to electronic alerts. Through this, banks contact and send anti-fraud messages to their customers.
Owing to reputational risk, banks try to refrain from public prosecution of erring staff. We found that banks adopted shaming as a mechanism for instilling discipline within their organisations while attempting to ease out “bad eggs” through flagging of their images on computers and across the banking industry.
There is a need to check fraud through customer awareness and financial literacy education.
While fraudsters continue to design new ways of working on customers’ vulnerabilities, Nigerian banks need to use the Cybercrime Act to prosecute offenders as a way to boost confidence in the banking sector and deter fraud in the future.
The domestic wings of the Murtala Muhammed Airport (MMA) Lagos, and Nnamdi Azikiwe Airport, Abuja have been rated 57 percent in terms of meeting the requirements of Nigeria Civil Aviation Authority (NCAA) for the commencement of operations.
This implies that if the federal government had not shifted the proposed resumption of domestic flights hitherto slated for Monday (today), it would have been practically impossible to restart operations given that there are many gaps required to be filled, Daily Trust can report.
The NCAA Director-General, Capt. Musa Nuhu had at a briefing of the Presidential Taskforce on COVID-19 on Thursday last week declared that the June 21 resumption date was no longer feasible.
Our correspondent learnt that this conclusion was reached after a virtual stakeholders' meeting held on Tuesday where all stakeholders presented their restart plan in line with the checklist provided to them by the regulatory authority.
At the meeting, it was discovered that there are still many gaps that were yet to be filled by the operators including airlines and airports managers.
However, a follow-up meeting held on Friday night gave a vivid update on the status of the industry restart plan.
According to statistics from the NCAA, air navigation service providers are 80 percent prepared; airlines were scored 75 percent in terms of preparedness; ground handlers 180 percent, and domestic airports 57 percent.
However, the Lagos airport private terminal known as the MMA2 scored 87 percent, showing readiness to resume operations.
There are five airports slated for the commencement of operations including Lagos, Abuja; Mallam Aminu Kano Airport, Kano; Port Harcourt Airport, Omagwa Rivers State and Sam Mbakwe Airport, Owerri.
It was learnt that there would be a mock exercise tomorrow or Wednesday to simulate the planned resumption of flights, while the NCAA DG is expected to present another report to the Minister of Aviation, Senator Hadi Sirika.
A new date would also be suggested for the resumption of flights with stakeholders looking at between the first or second week of July.
Aviation analyst and former Commandant, Murtala Muhammed Airport, Lagos, Group Capt. John Ojikutu (rtd) said, "If FAAN is scoring 57% with Lagos and Abuja now, we should all be worried; what this conference has shown us is that the recent NCAA audits seem to put emphasis on private airline operators than the government operators.
Credit: Daily Trust
Nigeria will find it impossible to place taxes on the transactions of foreign tech companies like Netflix, Facebook, Google, Youtube and other virtual firms without foreign help, Head of Research at SBM Intelligence, Ikemesit Effiong, has said.
It will be recalled that the federal government announced its intent to tax OTT’s in the Finance act the president signed earlier in the year.
The legal document, which reviewed the countries tax policies, included any business that “transmits, emits, or receives signals, sounds messages, images or data of any kind by cable, radio, electromagnetic systems or any other electronic or wireless apparatus to Nigeria in respect of any activity including electronic commerce, application store, high-frequency trading, electronic storage, online adverts, participative network platform, online payments and so on, to the extent that the company has a significant economic presence in Nigeria and profit can be attributable to such activity.”
Effiong told SaharaReporters that it would be difficult for the federal government to calculate the Nigerian derived earnings of these companies’ activities.
He is sceptical about how the government will, for example, find out the volume of activities engaged in by Nigeria’s estimated 20m Facebook users and how much each transaction yielded in revenue.
He said countries across the world were discussing how to tax over the top technologies (OTT’s) and virtual firms that do not have end-user telecommunication infrastructure and share the profit.
“The only way I see Nigeria being able to negotiate a tax regime (OTT) will be for them to collaborate with our European and American partners,” he said.
“I can’t think of any African economy – South Africa included– that can do this on their own. Even global powers like the US and the EU are struggling with this.”
The minister for finance, Zainab Ahmed, gave clarity on how the government plans to implement the new tax regime by issuing the Companies Income Tax (Significant Economic Presence) Order. The finance minister is also empowered by the law to determine who a SEP is.
In the letter of the order, the first guiding principle in identifying who a SEP is will be to check if the company has sustained interaction with customers in Nigeria or agents of foreign entities based in Nigeria and have an annual earning in any currency whose value comes up to N25m or more.
Firms that fall into this category have been asked by the order to customize their platforms to enable them to receive payment in naira for taxable reasons.
“A foreign entity providing technical services such as training, advertising, supply of personnel, professional, management or consultancy services shall have a SEP in Nigeria in any accounting year if it earns any income or receives any payment from a person resident in Nigeria or a fixed base or agent of a foreign entity in Nigeria,” the act reads.
Education service providers are exempted though. Companies like Facebook, Twitter and Google, that make as much money off traffic as they do from promoted posts, would be difficult to tax, experts believe.
Most of these OTT firms do not have offices in Nigeria. Those who do only maintain a representational presence and Effiong thinks this is the flaw in the plan.
“If Facebook says we had 17m unique visits, how are you as a country going to quantify and verify it?” he wondered.
Explaining that every taxpaying entity in the country has to open their books to the federal or state revenue boards, Effiong said OTTs have to largely comply, they have to be transparent about the number of Nigerian users they have, the ads those users clicked on, what the monetary cost of those ads was… for tax authorities to be able to assess them.”
Save for a Chinese/Iranian/Russian mode of internet monitoring, the lawyer said it would be impossible for the government to validate the genuineness of the data it is given.
Kenya is another African country that has attempted to levy an OTT. Its revenue authority said in a recent draft regulation that foreign companies offering digital services should register in the country to pay value-added tax or get a tax representative.
Outside Africa, France has been the most desperate to begin charging virtual firms for the number of undeclared profits they earn across the world.
In January, Macron’s government said it was going to go ahead of the EU conversation on the matter to collect three per cent of the global annual earnings of these firms.
That move was swiftly countered by the Trump administration, who threatened to massively heighten excise duties on goods coming out of France. Since then, Coronavirus has stalled the possibility of a joint tax regime for over-the-top technologies in the European Union.
Nigeria and Kenya are chasing the monies that could come from this new pull of cash though. It could be vital funding that would ease the recession fears in Africa’s largest economy.
The Government of Nigeria plans to tax foreign digital service providers offering services to Nigerians and earning revenue in naira.
Some of these service providers which are video streaming sites, social media platforms, and companies that offer downloads of digital contents are expected to pay digital tax to the Federal Inland Revenue Service.
The Minister of Finance, Zainab Ahmed, had issued the Companies Income Tax (Significant Economic Presence) Order, 2020 as an amendment of the Finance Act 2019.
The order aimed to impose tax on a foreign entity with respect to certain services or digital transactions if it had a Significant Economic Presence in Nigeria.
It further stated that the finance minister may by order, determine what constituted SEP in Nigeria.
Netflix, Facebook, Twitter, among others are some of these foreign companies that offer digital video and advertising services to Nigerians.
Others like Alibaba and Amazon generate revenue from Nigeria by processing and transmitting data collected about users in Nigeria, provision of goods or services directly or through a digital platform or offer intermediate services that link suppliers and customers in Nigeria.
The new regulation would apply to companies with income of N25m or equivalent in other currencies from Nigeria in a year and those with a Nigerian domain name (.ng) or a website address in the country.
The SEP order mandated foreign companies with sustained interactions with persons in Nigeria and customising their digital platforms to target persons in Nigeria by stating the prices of its products or services in naira to pay taxes.
According to the Act, a foreign entity providing technical services such as training, advertising, supply of personnel, professional, management or consultancy services shall have a SEP in Nigeria in any accounting year if it earns any income or receives any payment from a person resident in Nigeria or a fixed base or agent of a foreign entity in Nigeria.
However, payments made to employees of a foreign entity or for teaching in an educational institution are exempted.
Analysts at PricewaterhouseCoopers said some of the affected foreign digital companies would be required to register for income taxes in Nigeria and file annual tax returns even if they did not have a physical presence in Nigeria.
They added that Nigerian resident businesses (as well as the fixed bases of non-resident companies) that have transactions with the affected non-resident companies would also be required to account for withholding tax on some of the payments made to these foreign companies.
PwC raised concerns as to how the FIRS would enforce compliance without international consensus, as a number of the companies affected might be outside the territorial reach of the agency.
According to the consulting firm, the problem will also be exacerbated where the companies sell their products and services directly to individual consumers in Nigeria.
Racism against Nigerians – and other Africans – is not new in China. Africa-China history is marked by solidarity, but also dented by old and new racism. Nothing at this moment suggests that the current situation will drastically change.
Some recent events are low moments in the ever-oscillating relationship between China and Nigeria.
A video emerged on 10 April of a Nigerian diplomat in China, Razaq Lawal, publicly criticising his compatriots’ maltreatment in Guangzhou by Chinese officials. Lawal protested that Nigerians were kept in COVID-19 quarantine beyond the normal 14 days for Chinese citizens. Chinese officials were also seizing their passports. He pointed out that the Nigerian government did not treat Chinese citizens living in Nigeria any differently from its own citizens.
The video drew the ire of Nigerians and the Nigerian government. The speaker of Nigeria’s House of Representatives, Femi Gbajabiamila, demanded answers from the Chinese ambassador to Nigeria, Zhou Pingjian. At about the same time the Nigerian Medical Association was protesting a government decision to invite a Chinese medical team to assist in the fight against COVID-19.
Based on my research on relations between the two countries (especially in terms of labour relations) over the past decade, I believe that incidents like this may keep recurring. That’s despite the assertion by Nigeria’s foreign minister, Geoffrey Onyeama, that Nigeria would “take definitive steps against China”.
I identify three main reasons.
Why things won’t change
Official relations date back to February 1971, when Nigeria established diplomatic relations with China. But contact between ordinary Nigerians and Chinese predates the 1967-70 Biafran Civil War. Though some argue that China supported the Biafran forces against the Nigerian government, no post-war government in Nigeria has confirmed Beijing’s involvement.
Along with other African countries, Nigeria supported China as the genuine representative of the Chinese people in 1975. This led to the replacement of Taiwan at the United Nations. High-level bilateral visits followed, setting the stage for increased trade. Although accurate figures are difficult to find, Nigeria-China trade galloped from about $1.8 billion in 2003 to $13.5 billion in 2018.
As the relationship grew, more Nigerians established business and other relationships in China.
Nigerians’ maltreatment must, however, be understood within the broader maltreatment of Africans in China. This can be traced to the 1960s, when African students began to arrive in China. It intensified in the 1970s and 1980s when there were protests against – and by – Africans in China.
Coincidentally, a landmark incident that led to the death of a Nigerian happened in 2009 in Guangzhou, where Nigerians were recently maltreated. It led to protests by Nigerians and other Africans, “demanding justice from the Chinese police after officers chased the man out of a high-rise window in a tightening security crackdown on illegal over-stayers in the city this year”.
In 2012, there was another protest by Africans in Guangzhou over the death of a Nigerian in police detention.
It’s my view that Nigeria’s reluctance to call out Chinese actions over the years is the main reason why the status quo persists.
While publicly painting a picture of equality, China continues to dominate relations with Nigeria, as I observed in a 2015 paper co-authored with Bukola Ajayi. We see this in imbalanced trade, Nigeria’s growing dependence on China, and China’s growing importance in Africa. We also drew attention to the issue of counterfeit, adulterated and sub-standard drugs and other products imported from China into Nigeria.
Back then, I commented on Chinese labour relations in Nigeria and the challenges of fostering the International Labour Organisation’s decent work agenda. My paper pointed to the weakness of the Nigerian government to respond to the maltreatment of its citizens by Chinese companies. I argued that this created a space for both civil and uncivil responses by non-state actors.
In April 2020 – five years later – we witnessed another report of maltreatment.
The second reason is due to Chinese investment in Nigeria.
A good number of Chinese multinationals and small companies operate in Nigeria. Chinese companies in Nigeria are building much needed roads and railways, airports, and telecommunications infrastructure. There are currently about 218 registered Chinese firms in Nigeria. They are involved in construction, furniture, food and beverages, beauty, and product assembling plants, among others.
Meanwhile, Nigeria’s trade deficit against China remains huge. Between 2015 and 2018, for instance, the trade deficit stood at N6.83 trillion (which exchanges for about $17.5 billion today) in favour of China. This affirms that China benefits more at the moment. Though accurate data remains difficult to get, it is estimated that total trade between both countries between 2015 and 2018 was about $49 billion. This means that goods imported from China into Nigeria in that period were about $17.5 billion more than those exported from Nigeria to China. In any case, a significant amount of Nigeria’s export to China is a primary product: crude oil.
The third reason concerns China’s financing of development projects.
China is a major financier of large projects in Nigeria. These include the $874 million, 187km Abuja-Kaduna rail; the $1.2 billion, 312km Lagos-Ibadan expressway; the $1.1 billion Kano-Kaduna railway lines and the $600 airport terminals in Abuja, Lagos, Port Harcourt and Kano.
An estimate puts the current cost of Chinese projects at $47 billion. Many of these are financed by Chinese loans. It will be difficult for a country that relies so much on China to take action against Beijing.
With the poor labour standards in China itself and institutions’ weakness in Nigeria to check periodic abuses of Nigerians by Chinese companies, the chances seem low that Nigerian politicians and government will – or can – seriously respond to Nigerians’ maltreatment in China.
What to do?
The latest treatment of Nigerians in China is a dent on Nigeria-China relations. But if relations are to make progress, at least two important issues must be addressed. First, the Chinese government must do more to educate its people, making ordinary Chinese sensitive to issues of racism.
Second, Chinese citizens in China must understand that their actions could have implications for their compatriots in Africa. This could affect China’s long-term relevance in Africa as a partner.
But these issues concern not just ordinary Chinese citizens. Racism may be a symptom of much bigger problems for the Chinese government. This could be an opportunity for the Xi Jinping government to learn, and more importantly act.
The traditional leadership and redeemer posture of Nigeria in Africa has, in recent years, been put into question.
Issues like corruption and infrastructural decay have held the country down from playing a leadership role in Africa. As have transitions from one poor leadership to another. A visionary leadership is lacking while public institutions are weak, inept and compromised. Decades of political patronage and nepotism have seen a corrosion of quality and performance in the public service.
In addition, the intractable problem of Boko Haram and Islamic State, coupled with kidnappings, have created a security crisis. All continue to shatter the myth of military invincibility and the might of the Nigerian state.
In the beginning, it was not so. From independence in 1960, Nigeria took upon itself the role of uniting Africa against western recolonisation. The continent, from then on in, became the centre-piece of its foreign policy. The fact that nations were living under foreign rule made it possible to galvanise them around a common cause. This led to the creation of the Organisation of African Unity – now the African Union – in 1963 and Economic Community of West African States in 1975.
Nigeria assumed a leading role in these events as it forged a foreign policy with a strong Afrocentric posture. In fact, so frenetic was its involvement in this role that it sometimes paid little attention to the home front.
Nigeria’s leadership role on the continent was a product of the vision, dreams and, sometimes, whims of the founding fathers. They were nevertheless premised on real national capacity. Jaja Wachukwu, Nigeria’s first external affairs minister noted in 1960 that:
Our country is the largest single unit in Africa… we are not going to abdicate the position in which God Almighty has placed us. The whole black continent is looking up to this country to liberate it from thraldom.
This defined the country’s behaviour and continental outlook and has continued to influence successive administrations – weak or effective.
Assuming a leadership role
The sheer size of Nigeria’s population – the largest on the continent which rose from 48.3 million in 1963 to over 200 million in 2020 — gave the country the idea that Africa was its natural preoccupation.
In addition, its colonial experience and the abundance of its oil resources and wealth have empowered Nigeria economically. This made it possible for the country to pursue an ambitious foreign policy. It also permitted Nigeria to finance its Civil War, strengthening its international independence. And oil made possible an unparalleled post-war recovery.
Nigeria has used its influence to good effect and to good ends. For example, it worked with other countries in the West African sub-region to establish the Economic Community of West African States in 1975. It went on to push for the prevention and resolution of devastating conflicts that engulfed Liberia in 1992. The conflict spilled over into Sierra Leone and other countries in the region. Nigeria spearheaded the cessation of hostilities and created the cease-fire monitoring group to bring a total end to the civil strife and restore democracy in both countries.
Many observers agree that the sterling performance of the monitoring group is unparalleled in the history of regional organisations the world over. It has now become a model to emulate for its operational efficiency and for giving regional actors pride of place in the resolution of regional conflicts.
It spent over US$10 billion in these peace campaigns and also lost soldiers in the process.
Nigeria has not limited its peacekeeping role to West Africa. It has also been engaged in Burundi, Democratic Republic of the Congo, Zimbabwe and Ethiopia-Eritrea.
The country also played the most important role in fighting apartheid in Southern Africa and supporting liberation movements on the continent.
But Nigeria has not been immune to challenges facing countries on the continent. Corruption, misappropriation of public funds, electoral malpractices, insurgency and terrorism have devastated its capacity and weakened its moral fortitude to lead the continent.
Amidst enormous wealth, poverty in Nigeria is endemic . It could even become the poverty capital of the world, according to The World Poverty Clock. Nigerians have been reduced to the behest of the politicians that tie them to gridlock of “stomach infrastructure”. This is a new trend which reflects institutionalised and structural poverty. Deprivation puts people in a vulnerable and compromised position where the desperation for survival makes them sell their votes and conscience.
The slow movement of the current administration is also killing the Nigerian spirit and leadership posture. South Africa, Ghana and even Madagascar have acted faster in continental and global politics, including during times of emergency such as the current COVID-19 pandemic. But Nigeria seems content with a spectator position.
Nigeria has been relegated to the background of international affairs. To turn this around requires a revisit to the roots – and mowing the lawns afterwards. Nigeria must take stock of its own performance and capacities and re-position itself – first from within.
If Nigerian leaders are increasingly determined to proffer African solutions to their problems, then political structures and institutions must be reformed to reflect conditions suitable for sustainable development. Without a formidable political base, the economy will remain weak and fragile. The political base is crucial, because, the state is the repository of all ramifications and dimensions of power – political, economic, technological and military. And the purpose of the state is to authoritatively allocate these resources.
There is also a need to empower people to mobilise their local resources and to use them for development. And, of course, public funds should not be concentrated in the hands of few individuals, who may be tempted to steal them. An accountable system is one in which money management has several checks.
Oil wealth has been the country’s nemesis, a curse that has promoted corruption and blatant bleeding of the economy. But it is declining in value and as source of national revenue. Now is the time for Nigeria to make good its repeated and well-advertised intentions to diversify the economy.
A de-emphasis on oil would open the door to smarter ideas about how to create wealth. It would also herald in getting rid of a great deal of the phlegm of corruption which has played such a central role in Nigeria’s infrastructural decay, eroded its influence and given it such a negative image.
Added to this is the succession of weak rulers since 2007.
African leaders do not look towards Nigeria anymore for counsel, inspiration and help. They think Nigeria has a lot on its plate already and needs help. The potential is still there for Nigeria to return to power; but it takes leadership to (re)build the auspicious atmosphere and to activate the country’s potential – the two steps required to regain that enviable frontliner spot on the continent.