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The Federal Government has said that the over three-year-old currency swap between Nigeria and China has not worked in accordance to how Nigerians anticipated.
In July 2018, the Central Bank of Nigeria and the People’s Bank of China (PBoC) marked a currency swap arrangement of N720bn or CNY 15bn (Fifteen Billion Renminbi/Chinese Yuan) to permit merchants of goods from China to do their transactions in Chinese Yuan rather than the US dollar.
The currency swap was specifically entered to finance trade and investment between China and Nigeria; keep up with financial market strength and work with other associated purposes as might be settled upon by the two nations.
However, three and a half years after the arrangement was entered, Nigeria-China trade has been dominated by the use of the US dollars.The 2018 swap bargain expired in April 2021 and was renewed by the two nations.
CBN’s Financial Markets Activity Report for Half of Year 2021 uncovered that CNY 5.2bn (N337.23bn) has been sold from its commencement to the end of June 2021.
The Minister of Finance Budget and National Planning, Zainab Ahmed, while discussing on the policy in an interview on NTA disclosed that the policy was not presented well for importers to understand how it functions.
According to Zainab Ahmed, “The currency swap between Nigeria and China (it) has not worked the way Nigerians had expected, but it is still working.
Maybe it wasn’t presented well enough for people to even know what it was.
”She explained that the currency swap enables importers to order goods from China and pay with the Chinese currency instead of paying in dollars and then converting to the Chinese currency (Yuan).”
So people that are doing large volume trade through the official banking channels are taking advantage of that.” She added.
Zainab Ahmed further stated that the currency swap is still in place. She believes that with time, Nigerian companies will be able to access it.
She added that there is a lot that can be done. Therefore, the monetary authorities are also looking very much at that, because this has been going on for some time.
“Like I said, it is like having a credit line that you can trade for up to a certain volume. Maybe they will be reviewing and increasing that volume and also perhaps reducing the requirement for complying to be able to participate in that scheme.”
“And I will say that the monetary authorities are in the best position to provide what needs to be done going forward to expand that scheme.”