The National Association of Nigerian Traders (NANTS) has examined the recent Nigeria-China currency swap deal, which has been in the pipeline since 2016 and was finally consummated on April 27, 2018. We recall specifically that that on April 13, 2016, the Central Bank of Nigeria (CBN) and the Industrial and Commercial Bank of China Ltd (ICBC) signed a currency swap deal on behalf of both Countries. NANTS believes that the final signing the deal worth $2.5 billion by the Federal Government of Nigeria is a significant exhibition of wisdom, high political will, and courage on the part of the current administration to advance trade as a vehicle for economic growth and development in Nigeria, and must therefore be commended.
NANTS further believes that the secured agreement would help in providing adequate local currency liquidity to Nigerian and Chinese industrialists and other businesses, thereby reducing the demand for dollar and the attendant difficulties encountered in the search for third currencies. This smart move, which is long overdue, in NANTS estimation, would ease the lingering exchange rate crisis which has been heightened by the country’s high volume of imports. We, therefore, see the deal as a strategic move that would gradually strengthen the Naira against the US dollar and, certainly, reduce attention to and/or the unwitting dollarisation of the nation’s economy. While we do not have anything against the US dollar, we however note that its scarcity has remained a nightmare and punishment to the average Nigerian trader.
Statistically, we note that in 2015, Nigeria’s trade volume with China rose to $14.94 billion, representing 22.2 per cent of the $78.56 billion it traded with her eight biggest partners. At present, about 78.1 per cent of the nation’s import of consumables comes from the Asian Tiger, and these are items that flow into the market space in large volumes and turnover. As the umbrella body of Nigerian traders, it is worthy of note that in our calculation close to 68 per cent of traders regularly leaving the shores of the country at the various airports for imports on daily basis are heading towards the Chinese market. It, therefore, makes a lot of sense to tie the nuts with the Chinese currency, not only to facilitate seamless transactions, but also to reduce the multiple jeopardy faced by traders and importers who would exchange the local Naira to Dollar and from Dollar back to Chinese Yuan, thereby losing currency value at two poles. More so, the currency swap implies that Chinese Yuan is free to flow among different financial institutions in Nigeria just as is the case with the US dollar, Euro and Pounds Sterling, and to that end, Nigerian businesses could transfer funds to China in the local currency without the hassles of passing through bureau de change or creating unnecessary stress for the CBN.

Furthermore, this deal, which makes Nigeria become the third African country to have such an agreement in place with China, will make it easier for Chinese manufacturers seeking to buy raw materials from Nigeria to obtain enough Naira from banks in China to pay for their imports from Nigeria. In summary, the Naira is expected to appreciate against the US dollar in the short-term, as the demand for dollar eases. It will encourage Nigerian importers to open Letters of Credit (L/Cs) in Yuan for the importation of raw materials, equipment, and machinery from China. It will facilitate greater foreign exchange transactions and promote bilateral trade relations between Nigeria and China, eliminate the cost of exchange rate differential caused by dollar exchange conversion and scarcity, ease the pressure on Naira and potentially stabilise Nigeria’s forex market, help to conserve Nigeria’s forex reserves, and shore up the value of the Naira in the foreign exchange market. It is hopeful that the deal as an instrument of bilateral relationship could encourage China to increase their imports from Nigeria, especially in crude oil, solid minerals, and other raw materials, thereby closing the huge trade gaps between the two countries.
While we commend the vision of the federal government in this direction, NANTS, however, wishes to sound the following notes of caution.
• The currency swap deal (with its unrestricted access to the Yuan, at an overvalued Naira exchange rate, N30/Yuan) has the propensity to trigger increased volume of imports to the country. The surge in Chinese imports if unchecked, especially given the history of appetite of Nigerians for imported goods, would negate the federal government’s import substitution agenda, stifle domestic production and place local industries in a pitiable and vulnerable condition with attendant effects that would defeat government’s efforts at job creation. Against this backdrop, NANTS calls on the government’s agencies and, in particular, the Nigeria Customs Service, to rise up to its billing in order to guard the nation against unbridled influx of goods.




• The CBN must ensure that constant oversight and regulation is at its peak so that the rise in demand for the Yuan will not result in a possible depreciation of the Naira against the Chinese currency and further widen the gaps in trade balance and balance of payments in favour of China.

• NANTS calls on government agencies, such as the Standards Organisation of Nigeria (SON), the National Agency for Food, Drugs Administration and Control (NAFDAC), and the Consumer Protection Council (CPC), to be alert and ready for combat to ensure that the currency swap deal and its possible attendant surge in imports does not turn the country into a dumping ground for inferior/substandard Chinese products. The existing trade deal between Nigeria and China must be revisited and retooled at this moment to strengthen control and sanction mechanism against irregular and sub-standard exports from China targeting the Nigerian market.


• Nigerian business actors and the Nigerian Export Promotion Council (NEPC), in particular, have an urgent call to duty against the realisation that the currency deal not only opens the vista for imports from China but also throws open the window of opportunities for Nigerian exports to China that must be explored. In practical terms, NEPC must, therefore, step up the collaboration with Nigerian traders and the Nigerian representative/diplomatic offices in China to identify such local commodities and items that could be exported to the Asian Tiger. NANTS believes that Nigeria’s recent increase in agricultural productivity should dynamise efforts towards exportable agro-commodities, which would further trigger proportionate increase in productivity that will benefit farmers as well as industrialists. In addition, government must sit up and aggressively pursue export-based economic policies (including a predictable/secured business environment and reliable trade policy enactment) as well as technology transfer agenda capable of attracting and receiving Chinese and other investors to confidently engage the nation’s economy for the expansion of their business interests.

http://akelicious..com.ng/2018/05/nigeria-china-currency-swap-commendable.html

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sheeey China go begin use naira and we Nigerians go begin use their yuan ni coz me am nor understanding oo

Good for importers from China

Hahahahahahahahahahaha

Just let #1 become $100 or less biko,
And #1 become £120 or less biko.


All these ying/yang/yuan stories just dey tire person, if it'll appreciate naira in terms of £/$/€, then no wahala.

All na risk, but a sensible risk according to some economists.

At least commend d fg dis tym, lets nt always look at their negative part lets also see d positive side too

I beg make this govt no put us for wahala wey we no send them oh

Exactly what I lectured a few of my friends on, yesterday.

@yunyjoe I can't check my mail. I noticed you sent something. You can resend to pheelipsteven@gmail.com

.

Good deal then. Nice write up OP.

Naira don die.

See as them hand it over to Chinese �

The Comments above tells very bad about Nigerian youths..

They dont read and cant make a meaningful convo out of this post..

And want to rule the country? I doubt we can..

Are they saying we will be using chinese currency for naija here or just for international trading,some should kowachiet abeg!

Rickyzagy:
Naira don die.

See as them hand it over to Chinese �

na your comprehension die

This is potential deal for this country if only we could understand the terms involved in the contract, so that it will not affect our local product such as "tin tomato and tooth pick. Waiting vividly. Ire o

IN CASE YOU DON'T UNDERSTAND

I know Most of You don't know the meaning of Nigeria naira/yuan swap with China.. And why American government is desperately smoothing their relationship with Nigeria.

This is a clearer picture of the deal and it's effects on our economy and way of life.

Soon, you may be buying that techno phone you bought at N80,000 for N12, 000 .

The Central Bank of Nigeria have finally signed the currency swap deal we have been expecting for the past 2 years with the Chinese government.

The importance of this is that since almost 70% of the goods we import come from China and Asia and only about a meagre 12% come from America, why must we use Dollars to transact with China?

Thus, with the new deal, instead of using dollars at N350 to 1dollar to import those goods, we can now buy Yuan at 47 naira to 1 Yuan and import those stuffs directly. Therefore, Instead of buying these goods in dollars in China, we will now buy them in Yuan at 5 times cheaper than their dollar rates.

Meanwhile, it should be noted that China is now the highest importer of our crude. This means that our trade with them can be on Naira/Yuan basis.

This is a giant stride that our media needs to disseminate. It's a great achievement by this administration in its effort at repositioning our economy.

Of course, with d new deal, d demand for dollars will nose dive, with an attendant crash in its price.

Try to monitor exchange rate. Some of those guys who hoarded foreign currencies to make gains will off load them in order not to have heart attack over their huge loss arising from the currency swap deal with china.
Dollars and pounds will flood everywhere with no buyers, as the buyers will draw naira from their accounts in banks with presence in China.

Many NIGERIA banks will be seeking to have their representative office in China like first bank who saw to the future and already have office in China.
Inflation will go down drastically because of the price of commodities that will drop......

IME1:

I beg make this govt no put us for wahala wey we no send them oh

wahala ke? expect things to be cheaper and more Chinese investment in manufacturing sector.dollars becomes weaker and as more African countries follow suit,Chinese yuan becomes Stronger and their influence becomes stronger...thus ,stronger symbiotic investment in africa,instead of parasitic investment by other countries

construction in naija by Chinese companies will be cheaper than ever...

Goatluck started many good policies but never completed any.

Printerscanner:
Goatluck started many good policies but never completed any.

stop the hatred,buhari started it 2 yrs ago...but was put on hold

Is that so

Ok

This is commendable from NANTS. At least they proffered solutions to some of the potential problems that may arise.

We need to maximize this opportunity and increase non oil exports to China.

Slatemsk:
IN CASE YOU DON'T UNDERSTAND

I know Most of You don't know the meaning of Nigeria naira/yuan swap with China.. And why American government is desperately smoothing their relationship with Nigeria.

This is a clearer picture of the deal and it's effects on our economy and way of life.

Soon, you may be buying that techno phone you bought at N80,000 for N12, 000 .

The Central Bank of Nigeria have finally signed the currency swap deal we have been expecting for the past 2 years with the Chinese government.

The importance of this is that since almost 70% of the goods we import come from China and Asia and only about a meagre 12% come from America, why must we use Dollars to transact with China?

Thus, with the new deal, instead of using dollars at N350 to 1dollar to import those goods, we can now buy Yuan at 47 naira to 1 Yuan and import those stuffs directly. Therefore, Instead of buying these goods in dollars in China, we will now buy them in Yuan at 5 times cheaper than their dollar rates.

Meanwhile, it should be noted that China is now the highest importer of our crude. This means that our trade with them can be on Naira/Yuan basis.

This is a giant stride that our media needs to disseminate. It's a great achievement by this administration in its effort at repositioning our economy.

Of course, with d new deal, d demand for dollars will nose dive, with an attendant crash in its price.

Try to monitor exchange rate. Some of those guys who hoarded foreign currencies to make gains will off load them in order not to have heart attack over their huge loss arising from the currency swap deal with china.
Dollars and pounds will flood everywhere with no buyers, a the buyers will draw naira from their accounts in banks with presence in China.

Many NIGERIA banks will be seeking to have their representative office in China like first bank who saw to the future and already have office in China.
Inflation will go down drastically because of the price of commodities that will drop......

thanks

Xtopher123:
The Comments above tells very bad about Nigerian youths..

They dont read and cant make a meaningful convo out of this post..

And want to rule the country? I doubt we can..

I think the same way, some people because of hatred they never see anything good! and they will be the first u see in church on sunday and mosque on friday, check there age u will surprised that they are still under 25. thank u jare for comment