Business

Currency swap deal with China ‘ll not stifle local companies – CBN

Published

8 years ago

May 21, 2018

The Nigeria-China currency swap deal will not stifle local companies and make the country a dumping ground for Chinese goods, the Central Bank of Nigeria (CBN) has said.

In a statement released at the weekend, CBN spokesman, Isaack Okorafor said contrary to some opinion, the currency swap deal will actually benefit Nigeria more.

He said the deal will open further the export market to China.

”I want Nigerians to know that the items that will come in are not necessarily finished goods, so the issue of Nigeria becoming a dumping ground for China does not arise.

Okorafor said one of the advantages of the deal was that it would encourage Chinese companies to set up factories in Nigeria, which would lead to industrialisation and job creation.

“Also, when they do that, they are not going to employ only Chinese workers. A greater portion of the job opportunities in these plants will be filled up by Nigerians,” Okorafor said.

The CBN recently signed a bilateral currency swap agreement with the People’s Republic of China worth about N720 billion.

With the currency swap, the Naira is expected to appreciate against the US dollar as the demand for dollars eases.

“The exchange of currencies between the Nigerian Central Bank and the Chinese Central Bank will make it easier for our entrepreneurs to have direct access to foreign exchange in Renminbi,” Okorafor said.

“And so it is a positive development as it will enhance the value of the Naira and reduce our dependence on the dollar for imports.”

Okorafor explained that the two central banks were still working on the exchange rates between the Naira and Renminbi.

“As we speak, the modalities, the operational manual and the guidelines are being developed.

“But I can assure you that the exchange rate will be such that it will be competitive, fair to all and will not hurt our local producers and importers,” he said.

According to Okorafor, once everything has been fine-tuned, Nigerian entrepreneurs can access renminbi through the money deposit banks, using similar rules for the dollar.

A clearing bank would be appointed for the transaction. Such a bank must have a branch in China, which some Nigerian banks already have.