₦airaland Forum

samogconsu:
Lol! See my people, see jubilation over China-Nigeria deal. Nigerians are jubilating over $2b loan from China and the so called Yuan trading deal. It is not unusual for people to jubilate over food that will hurt their stomach, but it is unfortunate to see medical doctors celebrating agbo jedi.

China want to borrow us 2 billion dollars, but they want to give us in Yuan and not the dollar itself. They are not handling us cash, but service exchange; meaning if we want to buy iron rod, we buy it from Chinese company and they pay the company on our behalf. If we want to construct railway, they will construct it for us and take the money out of the loan. In the end, we are bound to award contracts to them, cutting out competition from others and fairplay to others(non Chinese company can't bid or compete to reduce the cost.) They get to value the contract and determine the price, meaning they can sell something worth 200 Naira for N2000 and we don't have a choice 'cos it is on credit.

The worst of it is that China want us to pay back in dollars, that is not all, we are moving our foreign reserve to fake currency(Yuan) a currency that is manipulated openly by the Chinese government. Did anyone ask Lamido Sanusi what happened to some of our reserve he moved to Yuan few years ago? They sold us Yuan at 4 to a dollar, only to devalue their currency few weeks latter to 9 Yuan per $.
Many Nigerians don't know that even Chinese company don't want yuan, nobody want it, Chinese foreign reserve is in dollars, China is the largest holder of US bond, they want dollars by all means.

Also, China have more lobbyists in Washington DC than any other nations on earth, begging Washington politicians to always make policy in their favour, how can such country save us from USD?

Has anyone asked why China hasn't built any refinery in Nigeria?? They have the money, they want the profit, but never did it.
If China does anything against Washington interest in Nigeria, USA have too much political power over China, they will just tell them not to do it. China will continue to inflate the contract price, refuse to complete the project and deceive us further.
I don't blame Chinese leaders for trying to scam us, I blame our leaders for not being smart enough. What do you expect when you have political hacks negotiating on behalf of Nigeria against smart professionals from China.

I was thinking Nigeria political leaders will do research about Chinese lobbyists in Washington and understand the interest they are protecting before believing in Chinese version of Trojan horse.

We are the only one that can help ourselves, let's implement true federalism system and free market. Development is a culture and not a product, we can't buy it no matter how much money we have or borrow.

deluxez12:
I thought the President recovered billions of dollars from looters and he saved allota money from the TSA account, so why he's going to China to borrow money? or he just taking us for a ride

AntiIPOOP:
The school cert holder has done what a PhD holder could not.

Very simple economics. We buy most of our goods from China, so why must we pay the Chinese in dollars? The Chinese buy a lot of crude oil from us, so why must they pay us in dollars?

So PMB made a deal with the Chinese. We pay for the goods we buy from China in Yuan, the Chinese currency. They buy our crude oil and pay in Yuan.

The exchange rate is to be pegged at 30 Naira to one Yuan or RMB.

So how does it favour us? Simple.

The Yuan is now 6.48 to a dollar. So if you pay 30 Naira to the Yuan, that would be equivalent to 194.4 Naira to the dollar.

Since the dollar exchanges for 199 Naira, you save N4.6. 199 - 194.4 = 4.6. Simple, huh?

In simple terms, PMB has just strengthened the Naira by 9.15%!

And that's not the end of the story. As we begin to deal in the Yuan, the demand for dollar would plummet and this in turn would weaken the dollar. It would crash to around 140 Naira to the dollar.

May God bless PMB.

Tokety7:
1) First and foremost, this is azikwe road alongside the monorail track and not aba road
2) I still made use of Azikwe road late last week, there is nothing wrong with that road as at that week and no worker was working on the road.
Is it that between last week and this week, this road went bad and contractor are immediately mobilized?
3) Monorail was never abandoned by Amaechi, it was ongoing. Instead wike abandoned it having sworn not to touch it. use ur head.

Pending when i will ply this same road next week Gods willing to authenticate what i am seeing here, i can sense lies somewhere.

Empero1:
Sharap! What gives you the guts to ask if I'm alright! Now, to the bone of contention, I wonder where you get the idea that we're "poor and weak" obviously, you're not a good student of diplomacy.

With the abundance of natural resources that abounds in this great country, the word poor shouldn't be associated with us- China as an enterprising and industrialized country need what we have in this regard and vise versa. More so, with the intellectual resources available to us, we shouldn't be ascribed with the word weak- a sound diplomatic ground work is all we need to get things right at this juncture.

I'm a seasoned bureaucrat... an international acclaimed one at that, I have always help different many countries to get the best of deals from their counterparts without letting the initiator of the deal to subject itself to perpetual slavery in the hand of its associate country. By the way, there's something called trade by barter.

Anyway, my service is not for free, so for more information contact me privately.

TheRealGEJ:
Quote me... Before the end of this year, the naira will still be devalued... We are only postponing our our days of sufferings just like the typical Nigerian... But we will still be faced with the reality!!!

Nigerians and their one-wayy thinking pattern. Was there any agreement signed as to what happens should china decide to devalue their currency just as they did b4? Dnt frget in d said agreement, china is expected to construct d rail project frm lagos to calabar which 1. Has not bn included in d much disputed budget in d history of d country.

2. All materials to be used in d said rail project if finally approved will b imported frm china and as such no room for other companies to com bid for d contract which means they dictate all d how much involved in d project while nigeria dances to their tune. Am just sick of d marriage called nigeria

aloeman15:
In two sentences you've summarised the entire fate of this policy and its future effect on our economy.
Our import-driven, oil-based economy.
Look, just plan for a safety net for yourself and your loved ones, because this country has just signed its economic death warrant.

Seun:
It is my understanding that we already import a lot of goods from China (alibaba, etc). Most Chinese exports are priced and paid for in dollars.

Some questions for you:
1) What was preventing us from doing more of our importing from China before we decided to borrow billions of dollars from China?
2) How exactly will our borrowing billions of dollars from China cause us to suddenly start doing more of our importing from China?
3) What was preventing us from using the Yuan to pay for imports from China before we decided to borrow billions of dollars from China.
4) How exactly will borrowing billions of dollars from China cause us to suddenly start paying for Chinese goods with the Yuan instead of dollar?

Emekamex:
Good move but we all should be aware that China regularly devalues their currency in bid to make their export cheaper than the USA and other European producers, that is how they stay at the top.
Here is an excerpt from business insiders.


http://www.businessinsider.com/china-currency-devaluation-just-getting-started-2016-2

I will advise the government to limit forex to be converted to Yuan to around 6-8%, given China's unethical move of always devaluing their currency whenever their economy regresses in order for us not to lose our forex value.

Seun:
I have no problem with trade deals, but anyone who thinks this will strengthen the naira is confused. The only thing that will strengthen the naira sustainably is if we export more (or if the price of oil recovers). Our honourable president's well intentioned voodoo economics didn't work the last time and won't work this time either. He needs to listen to mainstream economists and follow their recommendations. Economics works.

15. Nigeria would become the clearinghouse for Yuan denominated transactions for the whole of Africa following the agreement.

20. Naming oil, refining and mining..

21. Nigeria is also considering issuing Panda bonds (mainly Yuan denominated) as against euro bonds because they are cheaper.

Alanzazani:
I have a problem with the Chinese they always comprise standards. My organisation embarked on a project worth half a billion naira with the Chinese these guys refused to transfer the technical know how to us. Language was a serious barrier and they feel u are drawing them back when u trying to understand what they are doing. After less than a year, the project has started falling apart and we are struggling to keep it going. They will come and take our jobs, no Nigerian engineer was involved in this project, they just used Nigerians as menial workers, breakig , digging, packing and so on so there was no transfer of knowledge. They rushed the job and rushed out leaving us with problems. I am very skeptical about them

Chukzyfcb:
It seems you know get the drift. Forex controls was imposed coz of the high demand & low supply. If majority of the goods are from china here in 9ja, it means we will potentially have a high demand for the yuan. Now how much is in the reserves to feed our appetite? I believe not so much. So what happens? Forex control applies, to allocate the scarce currency. Or do you suggest that Importers and other individuals will get the yuan as easy as they want and at the Official price? If yes, wake up!

dabossman:
Nigerians are very funny people. People without a bargaining chip are still forming boss. Why won't China benefit the most from this deal. What do we have to bring to the table? Crude Oil? What do we manufacture? Of course we are bargaining from a disadvantaged position. Do beggars have a choice? We laundered away our future through the years and now we are forming boss in the midst of our position of lack. Basic infrastructure like power, roads, a good rail network that covers our vast land we cannot boast of in 2016. Yet we are acting like we are coming to the table with the Chinese as equals. I dey laugh.

We better do our best to learn as much as we can from the Chinese and ensure that we develop our infrastructure and our economy now so that a few years from now we won't have to go to them again begging for another loan to do the same things all over again as has always been the trend in the past. But to think we are sitting at the table with the Chinese to bargain as equals is just an illusion, Let us face reality, we and dem no be mates. We are apprentices, and they are the Masters. Hopefully, we will apply sense and ensure that we get our "freedom" quickly or forever remain in servitude.

@jpphilips you really have said it the way it is. We have already squandered our future away in the past. Hopefully, we can retrace our steps.

Dpearlz:
This deal is both good and bad but There are questions we are not asking.

Nigeria imports 70% of the goods it uses from China thus making us a major market for them.
These goods include generators, iron, plastics, etc. Why will they help us fix our industries when it takes money from their country in the long run. If even only our electricity is fixed we can become self sufficient in very many areas.

There was also an article I read where they said most Chinese refineries are built to refine heavy crude oil but nigeria produces light crude so they may not be really intrested in our oil.

China has large deposits of iron ore and coal and many other resources thus they can produce things very cheap so it might not be most of our minerals we wish to start mining that they are interested in.

The advantages I can see here are they will sell their industrial products and expertise to nigeria (for an inflated cost), take advantage of this good will and obtain arable lands to grow some crops they may need, provide high level jobs for their people in another land (as they will manage the system for some time before it will be passed on) and may be buy Nigerians natural gas to generate cleaner electrical energy than their coal power generating plants.


That's just my opinion and I know I might be totally wrong.

Chukzyfcb:
Sounds good theoretically. But you are forgetting "forex controls". If cbn restricts how much yuan the people can get, then it'll push them to the parallel market. Then the exchange rate between naira & yuan will rise, thus defeating the purpose

Krismart:
I still see no reason for Nigeria to borrow such amount of money from China to finance the so called developmental projects when the economy is in a mess and the poor masses could hardly feed. What happens to the billions of dollars FG claim to have recovered from looters and our internally generated revenue? Besides, must all these projects be carried out in a year? Why not pick the most important projects that are achievable and embark on for this year and continue with others by next year. Presently Nigeria is owing lots of money and borrowing again from China will definitely compound our problems if not now in the nearest future. This is my humble opinion. God bless the Federal Republic of Nigeria

omohayek:
That you suppose you know my IQ score says everything there is to say about your limited intelligence. Since you're so smart, why don't you tell us all what Arrow-Debreu's general equilibrium theory, the socialist calculation debate and public-choice theory all tell us about the efficiency of private vs. public enterprise?

Your pathetic resort to insults to "justify" your (frankly illiterate) opinions illustrates everything that's wrong with Nairaland. Every houseboy and motor-park tout with a little poorly-digested half-learning can fancy himself an intellectual while spouting nonsense.

PrinceMario:
You're a genius sir. Thumps up for the simplified explanation.

greenpasture:
Well said. Good points. Respect

Sorry, but I'm forced to drop what I'm doing and respond to this. Your assertions are completely wrong on so many levels. Let me explain.

1. Exactly how does Nigeria's FX reserves quadruple overnight by moving to Yuan from USD? That's a nonsensical statement. How exactly will we earn money in Yuan? Does this trade agreement involve any form of reciprocity, that is, Nigerian companies can also sell into the large Chinese economy? Of course it doesn't. It's a one way street, they sell and we buy. All we will simply do is convert our Dollar earnings into Yuan at the prevailing FX Rate. More to the point, what is the value of having the bulk of our FX reserves in Yuan, a currency that's only accepted by China, versus Dollars, which is accepted in practically every country in the world?

2. Even Chinese companies themselves only accept Dollars in payment. Why? Because most countries neither trade in, or want to trade directly in Yuan, due to excessive Government manipulation of their currency

So Unionpay is??

3. The only beneficiary of this move is the Chinese, because it means that our Foreign reserves are useless to us UNLESS we spend it with Chinese companies. This is a form of financial colonisation, as once it starts, it will be almost impossible to reverse it.

4. These so called loans we are getting come with stringent conditions, including the fact that the infrastructure projects must be carried out by Chinese Firms, using Chinese workers. So its a clever way for China to boost their local businesses directly, whilst at the same time getting someone else to pay for it.

This is a terrible deal, and is selling our sovereignty as a Nation. I'm so saddened by this. Anybody who replies to my comment by using the word wailer or any other associated word, symbolising opposition to the deal on the grounds of Political affiliation, is nothing but a fool.

We seriously are foolish people in this part of the world. I predict that very soon, we will adopt the Yuan as our national currency, and people will celebrate it. So tragically sad.

TheGoodJoe:

I also put the American anger in context in weighing the pros and cons of this deal.

The fact of the matter is, our economy was crashing. With or without the anger of the Western World, we were doomed. What ever measures we put in place was short term.

The Telegraph article which circulated and carried by a lot of Western papers was the first strike. It was not a coincidence.

However, the speed at which the projects are completed and jobs are created will reduce the effect of whatever the Western World have in store for us.

1. You can not see logic, because there is no logic is applying for a loan, that you can not diversify the expense. The chinese government, will present list of chinese companies to handle the construction jobs in Nigeria and Chinese Citizens will handle the field jobs except labourers. The materials for the construction will be shipped from China, shipping paid to China and money remains in China. Lets say, Chinese company buy steel 5 Yuan and chose to capture 10 Yuan in the quotation, is there an independent auditor ? Must be chinese. So your $2b might actually mean $1b in real cost. So, China takes the away $1b in profit, plus interest, plus added employment to her citizens. What does Nigeria get ? Chinese infrastructure that is worst than Julius Berger can construct.

That is logic, I hope you see it.

2. Do I need to explain further that Chinese government consistently devalue their currency, manipulates it in such a way that it favors them, so your 30 Naira to Yuan today, might become 300 Yuan tomorrow, the sharp increase in value will attributed to high demand in Yuan even though no physical money moves in this trade deal.

I love the fact that USD to Naira rate will fall due to less demand, but then, that is a mirage if the value of Yuan will go up. Except value of Yuan stays low, then the purpose is defeated, cos importers wouldnt be needing dollars.

3. The Chinese are at trade war with America, Yes. And we have become another pawn in the games of Chess, I hope we survive.

DedeNkem:
That was my point earlier! China is digging Nigeria into a big hole because we've id*iots in leadership positions.

China is gradually taking over Nigeria.

Where is Nigerian Jerry Rawlings when we need him. Things are getting worse by the day!

Barcholder:
You should be careful about insulting others and their understanding of economic matters, because, I can tell you that his post is absolutely on point. That's exactly what's happening here. This is a terrible move on the part of our Government, and I'm very happy to debate this point with anyone. This is a field of expertise for me, and I dare say that I understand far more about it than post.

There, so challenge my assertions and lets have an open debate.

manny4life:
It gives their currency massive strength, how about the Nigeria currency? Please explain how this deal strengthen Nigerian currency or yet, be beneficial to our currency considering that Nigeria's "import" doors would be wide open.

I don't have a problem with the construction benefits but I believe that any successful nation can get any of this which makes be believe that this is NOT about benefits, rather an internal problem.

Even without this deal, Nigerians have always imported from China, I fail to see what difference this is gonna make. I mean ask yourself, why would I import raw materials whereas it's cheaper to import it "by pennies" from China? Exactly, even without this deal, most of our products will come from China, the only difference is that (1) It's official and (2) products will no longer be bought using $$$$ but rather, in Yuan. Anyone can now import from China because even our banks will now be trading in Yuan. Heck, Yuan is about to be the second currency after $$$. I'm yet to be convinced this is good for Nigeria.

Chukzyfcb:
Everyrone keeps talking about how this move will reduce pressure on dollars. Even the report says 90% of Int'l trade in Nigeria is done in dollars, but nobody is asking
Why then has pounds and euro risen this high?
Coz despite the fact we'v been dealing with dollars, the exchange rate of Euro"s and Pounds has also gone wayyyy High. How does this move help euros and pounds? Coz everybody is just mentioning dollars! Dollars!! Dollars!!!

greenpasture:
Nigeria gets huge advantages from this deal which by the way is a done deal.
1. China gets to reflate her economy without increasing inflation ( loan in exchange for purchase of goods and services)
2. Nigeria get dollar ( forget those people trying to confuse themselves. China is giving Nigeria dollar, repayable in dollar. China dominates the U.S Treasuries market so dollar isn't an issue for china - they have loads of it
2. Nigeria pushes project risk unto China. Each project must meet specified performance milestones ( nothing like abandoned project)
3. This is the part confusing the writer - Nigeria has held even during GEJ time 7% o it's fx in Chinese Yuan. This has gone up to 10% and nigeria's CBN becomes the Yuan exchange/ access point for Africa. This is huge because 70% of our important are from China so instead of suffering exchange rate loss going from weak dollar to strong Yuan, traders can buy Yuan direct from CBN. In view of the extensive use of this currency in Africa today t provides excellent arbitrage/ commission income to nigeria's CBN
4 yes federalism and diversification are good concepts but Nigeria also needs to bridge it's massive infrastructural deficit and in China it has a good Partner.

All in all, this is a great deal for Nigeria and China and the beginning of an alternative world financial market not solely based on dollars.

Fear not. It's a done deal. Wait for the impact. Tops next 12-18 months.

Respects

igwegeorgiano:
unfortunately u re sounding like a half baked economist. you just based ur assertion of a lay man's understanding of a serious economic issue which is far beyond ur understanding. i think u are the one with a blurred malfuntioning brain here. soonest u will understand better the negative implications of what ur dullard president has done.