Two years after the administration of President Muhammadu Buhari announced that the country was in advanced talks with China for a currency swap deal, the scheme has failed to take off.

The development now appears like a similar move made earlier under the administration of Goodluck Jonathan in 2013, in which several infrastructure deals were signed, but later reduced to bilateral trade rather than finance and capital flows.

According to reports, after a meeting with Chinese President Xi Jinping in Beijing two years ago, the Industrial and Commercial Bank of China Ltd (ICBC), the world’s biggest lender, and Nigeria’s Central Bank signed a deal on yuan transactions.


“It means that the renminbi (yuan) is free to flow among different banks in Nigeria, and the renminbi has been included in the foreign exchange reserves of Nigeria,” the Director-General of the African Affairs Department of China’s foreign ministry, Lin Songtian, said.

But the planned engagement was trailed by a mix of optimism, pessimism and caution from stakeholders and experts, citing previous experiences of similar efforts.

Foremost industrialist, Mazi Sam Ohuabunwa, in a monitored television programme, had said that the optimism greeting the Nigeria-China deals might pale into nothing, if the negotiators failed on the contents and terms of the agreement, especially with an antecedent of similar deals in other African countries that have not
been totally progressive.

For analysts at Afrinvest, the strong participation of private investors in the FDI and loan agreements sealed, sequel to the move, would improve the implementation rate relative to past bi-lateral investment engagements and could potentially boost capital importation from China and domestic infrastructure investment.

“We are currently caught in-between the two positions taken by the CBN Governor and Minster of Foreign Affairs. While awaiting official clarifications, we think the ‘currency deal’ could either be a conventional swap, in which the CBN and China would exchange a stock of their currencies at a predetermined exchange rate to be reversed at maturity of the swap line or a move by China to boost yuan-liquidity in Nigerian banks as a trade and investment currency in exchange for future assets transfer (probably oil) to China to liquidate the swap
line,” the analysts said.

Statistics showed that between 2013 and February 2016, Nigeria received $213.4 million worth of capital inflows from Mainland China, which are about 0.4 per cent of the $52.4 billion total capitalimportation into Nigeria within the period, ranking as the 18th largest source of foreign capital inflows into Nigeria.

But including the autonomous region of Hong Kong, total capital flows from People’s Republic of China amounted to $484.2 million within the period, still less than one per cent of total capital importation into Nigeria.


As at the end of 2017, the value of merchandise trade between Nigeria and China was put at $2.7 billion, making Nigeria the third largest African partner with China. But the figure was lopsided in favour of China.

Renowned economist and Chief Executive Officer of Financial Derivatives Limited, Bismarck Rewane, described the initial efforts as a waste of time and an aspiration that was never going to materialise.

He said there were too many unknown swap deals, with several of such deals in other countries not being progressive and models to follow.

“Nigeria wouldn’t have been better for it. If you want bilateral or trade relations, it is better to do it with your money, not swap. Naira is not a convertible currency in the international market, but our oil earnings are in dollars. So, we are still in the same place, that is, sell your crude oil in dollars and buy from China in dollars. Unless we sell crude oil to them and collect their yuan, swap is not ideal,” he said.

A top bank chief, who would not want his name in print said the mention of “swap” in the discussion was the biggest diversion that would have made any deal cumbersome and a rip-off on the country because China knows how to get a better bargain.

“But I thought there would have been also talks about reducing the naira-dollar-yuan intricacies in trade between the country and Nigeria. In fact, what the United Kingdom just offered Nigeria recently is what I thought the leadership would have pressed for.

“In all, the trip and the proposal were more like showing that we said something instead of not saying anything because I can’t see any positive since then except borrowing from them. The worst was the un-clarity, secrecy and withholding of information that dogged the plan until its failure,” the source said.

A fiscal governance campaigner, Eze Onyekpere, said such heightened expectations by the government through media was a clear case of “governance by propaganda”.

According to him, the way it was presented at the beginning was more of a done or near deal, with promises of improved returns for the economy.


“The two scenarios, which are tantamount to failure is either they lied to us when there was no agreement or they failed to follow through the deal. But they were faster in rushing to the media and now they have failed. It’s such a disappointment,” he said.

The Managing Director of Cowry Asset Management Limited, Johnson Chukwu said he was doubtful from the beginning of the possibility of such a deal that its terms were not defined- particularly the exchange rate and timeline.

According to him, it is one of the failed projects because there is no sign now that government has it on its agenda, as everything has remained under uncertainty and secrecy.

“It is like government took its eyes off it. Even the expectations that some of the Chinese counterparts will establish some of their plants here did not really work. But as usual, the Chinese are taking advantage of Nigeria as you can see them almost everywhere,” he said.






http://guardian.ng/business-services/nigerias-currency-deal-with-china-stalls-two-years-after-talks/amp

That's how our system is. They announce good plans then it dies down quietly.

The Nigerian govt is neva serious. They can and hoodwink at any slight opportunity

God sees all men....

CodeTemplar:
That's how our system is. They announce good plans then it dies down quietly.

God save Nigeria.
Lalasticlala where is our yuan.

When did dullards are in government I can hardly believe that what they are doing is in the best interest of this country...itsy just the case of the heart is willing but the body is weak....

Another APC scam. Fayose said so but you guys didnt believe

Not every words that comes out from this APC government are true, remembered they come through power with propaganda so what did you expect them to do.

Just believe 9% and yawn the other 91%.

Government of propaganda by propaganda and for propaganda.

Also APC foundation was built on lies.

Buhari is not economist, he is just a nomadic cattle bleeder....

It was all a hoax from the get go...I remember the zombie analysis from apc supporters back then...but as usual,another ill-thought-out policy bites the dust.

Not surprised.

Lol.

Shitcurrency
Shitcountry
Shitleaders
Shitpeople
Shithole

Fraudgeria will soon be better - Awolowo the fa.g (1971)

I no put mind before

When a government refuses to sit down with experts to discuss an agreement before making one that is what you get.
Blind agreement.

What do you expect when there is American interest in Nigeria

Lol

Not surprised

Britishcoins:
Buhari is not economist, he is just a nomadic cattle bleeder....

Anambla man I hail o

Dey don't trust us dat well jare

Infinix hot 4 on auction, quote me if interested

Today i can boldly conclude that



Buhari achieved nothing as a president


And is an all round failure in governance

Forget his time is up. No miracles just one year remaining which if for campaigns

This was one of the early signs this administration is full of deceit.
I remember how people celebrated at this news

issoke

Remove DH and I from DAPCHI.. U will get APC.. Those girls go excursion and they are back.. Whowan fool who?? BUHARI pls sing another song.. This one na old school music..

conductorl6:
Lol.

Shitcurrency
Shitcountry
Shitleaders
Shitpeople
Shithole

Fraudgeria will soon be better - Awolowo the fa.g (1971)

Savage!

Incompetency of the highest order. Tell me one good deal that this present administration has brought to the table.

I just laughed when APC touts were celebrating this Yuan currency deal.

If Buhari had tried it, then he would have been dispatched with by Washington.

Ask Chavez and Qaddafi who wanted to drop the dollar.

Most comments on Nairaland these days have been disappointing.
Stalling the deal maybe ideal for now considering the low level of Chinese transactions in Nigeria and the disadvantage position we are.

Our own very dullard understands only cow colony and ransom to boko haram.. he has no business in economic or financial matters and that's why he sees every rich person as being corrupt because he's too lazy to think..

I remember how zombies told us how the exchange deal was going to be the second best thing after wining world cup..
Hediots

Kikikikikikiki

When we said it at the time Zombies were huffing and puffing.

Our currency is no use to the Chinese. They want to shore-up their currency, make it go global and get more countries to hold their foreign reserves in Renmibi. They see renmibi competing largely with dollars and Euro.

We get our foreign exchange (95%/oil) in dollars and the Naira is weak against all major international currencies. Our economy is not growing at a fast rate and no other major goods and services that China would need from us worth billions of dollars. Why would China think they'd benefit from a "swap" deal? And at a fixed rate with an unstable currency like Naira?