Nigeria and the People’s Republic of China have sealed a $2.5 billion (Renminbi ,RMB 16 billion) currency swap deal, executed through the Central Bank of Nigeria (CBN) and Peoples Bank of China (PBoC)

The renminbi is the official currency of the People’s Republic of China. The yuan is the basic unit of the renminbi, but is also used to refer to the Chinese currency generally, especially in international contexts where “Chinese yuan” is widely used to refer to the renminbi. The distinction between the terms renminbi and yuan is similar to that between sterling and pound.

With the signing of the pact, Nigeria has emerged the third African country to have such an agreement with China. CBN spokesperson, Okorafor, said the feat was a culmination of over two years of painstaking negotiations by both central banks.

CBN Governor, Godwin Emefiele, led officials of the apex Nigerian bank in brokering the deal while PBoC Governor, Dr. Yi Gang, led Chinese team at the official signing ceremony in Beijing, China, on April 27, 2018.

Benefits:


1. The transaction is aimed at providing adequate local currency liquidity to Nigerian and Chinese industrialists and other businesses, thereby reducing the difficulties encountered in the search for third currencies.

2. The agreement is purely an exchange of currencies which 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.

3. The deal will protect Nigerian business people from the harsh effects of third currency fluctuations.

4. The agreement would provide Naira liquidity to Chinese businesses and provide RMB liquidity to Nigerian businesses, thereby improving the speed, convenience and volume of transactions between the two countries.

5. It will also assist both countries in their foreign exchange reserves management, enhance financial stability and promote broader economic cooperation.

6. It will now be easier for most Nigerian manufacturers, especially small and medium enterprises (SMEs) and cottage industries in manufacturing and export businesses to import raw materials, spare parts and simple machinery to undertake their businesses by taking advantage of available RMB liquidity from Nigerian banks without being exposed to the difficulties of seeking other scarce foreign currencies.

https://www.financialdigest.com.ng

China is the major beneficiary of this deal not Nigeria, naija has little to benefit.

How many of our products does China import except crude oil? This deal simply means more importation window has jst been opened for nigerians to import frm china as nigeria is only a consuming nation and not a producing nation.

Such deals are only beneficial for producing nations

Pierohandsome:
China is the major beneficiary of this deal not Nigeria, naija has little to benefit.

How many of our products does China import except crude oil? This deal simply means more importation window has jst been opened for nigerians to import frm china as nigeria is only a consuming nation and not a producing nation.

Such deals are only beneficial for producing nations

Ok.

What do you suggest?

Pierohandsome:
China is the major beneficiary of this deal not Nigeria, naija has little to benefit.

How many of our products does China import except crude oil? This deal simply means more importation window has jst been opened for nigerians to import frm china as nigeria is only a consuming nation and not a producing nation.

Such deals are only beneficial for producing nations

i totally agree, china produce virtually everything they consume in their country, government should rather develop means for Nigerian's to also start producing instead of encouraging more importation opportunities.

Najwal:


i totally agree, china produce virtually everything they consume in their country, government should rather develop means for Nigerian's to also start producing instead of encouraging more importation opportunities.

You are right.

But then should the government pretend that there is no pressure on the Naira for now?

This is a monetary policy, what you are suggesting is a fiscal policy that can also be pursued pari-pasu.