Financial
analysts have expressed concern that the currency swap deal recently
signed by the Central Bank of Nigeria (CBN) and the Peoples Bank of
China (PBoC) will stifle the Nigerian economy.
The News Agency of Nigeria (NAN) reports that the Currency Swap Deal was signed on April 27.
Mr
Boniface Okesie, the president Progressive Shareholders Association of
Nigeria, told NAN that the currency swap deal was unnecessary.
Boniface Okesie, the president Progressive Shareholders Association of
Nigeria, told NAN that the currency swap deal was unnecessary.
He said the deal would ensure that majority of the country’s foreign trade deals were channeled to the Chinese economy.
“This
will lead to economic dependence despite that Nigeria is a sovereign
nation. The policy will lead to the influx of Chinese goods into our
country considering that we are contending with weak regulation,” he
said.
will lead to economic dependence despite that Nigeria is a sovereign
nation. The policy will lead to the influx of Chinese goods into our
country considering that we are contending with weak regulation,” he
said.
Similarly, Dr Austine Nwaeze, a
lecturer in the department of Economics, Pan Atlantic University,
Ibeju-Lekki, Lagos told NAN that the deal was only good on its surface
value.
lecturer in the department of Economics, Pan Atlantic University,
Ibeju-Lekki, Lagos told NAN that the deal was only good on its surface
value.
He noted that in the long run,
the initiative would allow the Chinese to compete with our local
businesses, thereby, impeding the growth of indigenous firms.
the initiative would allow the Chinese to compete with our local
businesses, thereby, impeding the growth of indigenous firms.
Nwaeze
said the only benefit of the currency swap deal for Nigeria was that in
the short run, it would address third party sourcing of the Chinese
currency by Nigerian importers.
said the only benefit of the currency swap deal for Nigeria was that in
the short run, it would address third party sourcing of the Chinese
currency by Nigerian importers.
“However,
it will take the trade deals with the Chinese to a new height and
reduce the pressures of our foreign exchange,” he said.
it will take the trade deals with the Chinese to a new height and
reduce the pressures of our foreign exchange,” he said.
NAN
reports that the CBN and the PBoC have begun the execution of a 2.5
billion dollars (Renminbi 16 billion) bilateral currency swap agreement
entered into over two years ago.
reports that the CBN and the PBoC have begun the execution of a 2.5
billion dollars (Renminbi 16 billion) bilateral currency swap agreement
entered into over two years ago.
Godwin
Emefiele, CBN Governor led some officials of the apex bank to the
signing ceremony in Beijing, China. His PBoC counterpart, Yi Gang,
headed the Chinese team. The pact was the result of over two years of
negotiations between both banks.
Emefiele, CBN Governor led some officials of the apex bank to the
signing ceremony in Beijing, China. His PBoC counterpart, Yi Gang,
headed the Chinese team. The pact was the result of over two years of
negotiations between both banks.
The
transaction is aimed at providing adequate local currency liquidity for
Nigerian and Chinese industrialists and other businesses in order to
reduce their difficulties in the search for a third currency.
transaction is aimed at providing adequate local currency liquidity for
Nigerian and Chinese industrialists and other businesses in order to
reduce their difficulties in the search for a third currency.
In
a statement, CBN Acting Director, Corporate Communications Isaac
Okorafor, explained that Chinese businesses would get naira liquidity
and Nigerian businesses, RMB liquidity under the agreement.
a statement, CBN Acting Director, Corporate Communications Isaac
Okorafor, explained that Chinese businesses would get naira liquidity
and Nigerian businesses, RMB liquidity under the agreement.
