By Elizabeth Chukwuma
At long last President Muhammadu Buhari has given the go ahead to Godwin Emefiele , the governor of the Central Bank of Nigeria, CBN, to go ahead with the implementation of the Currency Swap deal with China instead of using the United States, US, dollar to conduct transactions between Nigerian businessmen, particulars and their Chinesese suppliers including investors from both countries.
T investigation by The Value News , reveal thathere had been pressures on the CBN and the National Economic , NEC, to advice the government , over the years to advice the government to cue into the Currency swap deal with the Chinese currency Yuan as many other countries have done in their transactions with them .
The pressure became more pronounced in 2017, as over 70 percent of the country’s imports came from China, India and other Asian countries while 12 percent only came from the United States and Europe. The Chinese based Nigerian importers were said to have piled up pressure on the CBN , using their contacts in the Presidency and the Federal Ministry of Finance , to allow them use the Yuan , in their transactions with their Chinese suppliers instead of the US dollar.
Their worry was that they are spending too much money to import goods from China, by using the US dollar , going by the official exchange rate of N360 .00 to a dollar. When the Value News visited the Tincan Island port last Wednesday and had opportunity of discussing with some of the freight Forwarder and agents, they welcomed the government decision to go ahead with the implementation of the Currency Swap Deal with China as a way of reviving the nation’s economy. At present, N47.00 exchanges for one Chinese Yuan in the international currency market.
The currency swap deal, which is a three year tenor allows both the CBN, and Peoples Bank of China, PBoC, to swap a maximum amount of CNY 15 billion for N720 million. This amount, according to market analysts is equivalent to $2.5 million using an exchange rate of N305 to a dollar, which was what the dollar was sold to importers in the inter Bank foreign Exchange market.
It was learnt that the Nigerian Customs Service, NCS , has been given the nod by the CBN , to do their calculation on duties on imports from China based on the current exchange rate of N47.00 to the Chinese Yuan . Note that as provided in the Currency Swap agreement , the deal was precisely to ”finance trade and investment between China and Nigeria only as well as maintain the country’s financial market stability and facilitate other connected purposes as agreed upon by both the African and the Asian countries.
Indeed, the decision by the government to adopt the Yuan in transactions with Chinese suppliers and investors , may have sent jitters down the spine of currency dealers in the nation’s black market who fear losing their business to the Chines yuan dealers. Many of them over the years have been hoarding US, dollar and other foreign currencies to make huge gains with the continued devaluation of the naira.
A Currency dealer, who spoke to The Value News described it as a rumour that the CBN , has begun to implement the Currency Swap Deal with China, noting that they would be the most hard hit. Note that many approved Commercial Banks in the country will flood the Chinese market to have Representatives office. First Bank Nig. Plc, may have read the mindset of the government economic policy makers to influnce the Katsina state born Nigeria President to cue into the Currency Swap deal with China, if he eventually secures a second term in office that it was said to have quickly opened a functional Representative office in the Asian country to help importers using the Bank in the transfer of funds to the Chinese suppliers.
Buhari may have shocked Donald Trump, his counterpart in the US, with the endorsement of the Currency Swap deal with China which would further see the dollar crash of the dollar in the international Currency market. recall that the American government has used threats of not buying theNigerian oil to force the government to drop the idea of the Currency swap deal with China and still be using the dollar in transactions with the oversea Customers including those of them in China. .
The endorsement of the Currency Swap deal with China by the CBN, is coming barely one week after the President , came back from his private trip to the United Kingdom., UK. The deal with China, may have informed the reason why he said he would provide effective leadership to improve the standard of living of Nigerians in the next four years and beyond.