Ebola outbreak making Chinese investors skittish

Ebola epidemic casts a shadow over Africa's largest economy, and many firms have put expansion on hold

With the rapid spread of Ebola in four African countries - Guinea, Sierra Leone, Liberia and Nigeria - concern has risen about the safety of traveling, living and investing in those countries. Inevitably, these economies are facing tough challenges.

But more worrisome for economists and investors is the size of the economic impact if a truly large-scale epidemic breaks out in Africa's most populous country, Nigeria. It is also the biggest economy on the continent with gross domestic product of $510 billion and a growth rate of 6.8 percent in 2013.

Prospects for long-term investment are stable, but the epidemic may cause short-term uncertainty, according to Chinese entrepreneurs in Nigeria.

"We are confident about the health system in Nigeria, and we know the disease will surely be brought under control," said Xue Xiaoming, vice-chairman of the Chinese Chamber of Industry and Commerce in Nigeria.

Xu added that all cases in the country were confined to a small circle of people who had contact with patients. "If all the patients are isolated from the public, the country will be absolutely safe," he said.

The death toll in Nigeria rose to five on Tuesday, Health Minister Onyebuchi Chukwu said.

The World Health Organization said the total international death toll from the virus has reached 1,229.

Xue said he has received numerous queries from potential Chinese investors, many of whom have put their plans in Nigeria on hold.

Chinese investment in the nation runs the gamut of sectors from commodities to manufacturing, infrastructure construction and resources. After Nigeria became the biggest African economy earlier this year, economic cooperation with China was expected to expand swiftly.

"But Ebola has cast a shadow over new possible investment from China," Xue said.

Bilateral trade has surged during the past decade, reaching $13.6 billion in 2013, five times bigger than the figure in 2005.

"Also, Nigeria was the first African country to use the yuan as an official reserve currency, so the prospects for Chinese investment have been looking promising," he said.

Xue said Ebola would not affect existing Chinese investment in Nigeria because there has been smooth communications related to Ebola between local authorities and Chinese investors.

But news about the outbreak has many potential investors on edge.

Many have suspended investment plans after hearing that some international carriers such as Emirates Airlines, Korean Air and Kenya Airways have halted flights to affected countries, he added.

The World Health Organization insisted that the risk of contracting Ebola is quite low and it has so far declined to impose a travel ban to affected countries.

Travel restrictions may cause misunderstanding and fear among those who plan to visit or invest in these regions, according to African officials.

Paul Lolo, Nigerian ambassador to the African Union, said: "Adopting measures that stigmatize citizens of affected countries will not yield any positive results and is not in keeping with our traditional African solidarity.

"What is needed is to put in place measures to prevent the risk of traveling passengers transmitting the disease to other countries. Banning (people from) affected countries from traveling will affect future international relations."

The current Ebola epidemic is the biggest and most complex that the world has experienced since the first human outbreak in 1976.

WHO, in partnership with the ministries of health in Guinea, Sierra Leone, Liberia and Nigeria, has reported 2,140 suspected and confirmed cases, including more than 1,300 laboratory-confirmed cases as of Tuesday.

However, the epidemic may be far worse than the reported figures, because some people are avoiding health facilities, said a statement by the AU.

"It's natural for potential Chinese investors to worry about the situation. Lagos is the largest city in Nigeria and all the confirmed cases are here," said Wu Tao, secretary of the commerce chamber and also an investment specialist serving Chinese customers at a bank in Lagos. "But what they don't know is that daily life goes on as usual here and if you take proper precautions, there is no chance to be infected."

Wu said that when the situation calms down, investors will quickly revive their plans, because the attraction of the large market potential in Africa, and Nigeria in particular, is incomparable.

"Many factories have been established in Lagos by Chinese companies in the past few years, and they have realized the importance of this city in this country, and of this country in this region," he said. "So to invest here is a smart choice if one wants to have a foothold in Africa."

Wu said that a lesson for investors is that with the deepening of regional integration in Africa, health and security risks should be taken into consideration when they make African investment plans.