President Muhammadu Buhari
and Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele moved closer to
actualizing their promise to strengthen the naira against the United States
dollars by signing a landmark currency deal with the Industrial and Commercial
Bank of China Ltd on Tuesday in Beijing, China.
The
agreement will allow Nigerian traders and businesses, which imports mainly from
China conclude their transactions in the Chinese currency, the Renminbi (Yuan),
instead of the dollar.
THEWILL
further gathered that the new agreement would see Nigeria-China trades, which
accounts for over 70 percent of imports into Nigeria, concluded in the Yuan.
Until
now over 90 percent of international trades between Nigeria and the world is
done in dollars, and in the process putting so much pressure on the naira.
Nigeria imports almost all it needs from the West, Middle East and Asia.
The
CBN is expected to diversify a huge chunk of Nigeria’s foreign reserve from the
dollars to the Yuan to perfect the agreement.
"It
means that the renminbi (Yuan) is free to flow among different banks in
Nigeria, and the renminbi has been included in the foreign exchange reserves of
Nigeria,” Lin Songtian, director general of the African affairs department of
China’s foreign ministry, told reporters in Beijing a few minutes after the
agreement was signed between the Governors of the nations’ reserve banks in the
presence of President Buhari and President Xi Jingping of China, who is hosting
Buhari and top Nigerian officials to a state visit.
Lin
said a framework on currency swaps has been agreed with Nigeria, making it
easier to settle trade deals in Yuan. China has signed currency swap deals with
countries ranging from Kazakhstan to Argentina as it promotes wider use of its
Yuan.
THEWILL
exclusively gathered that Nigeria would become the clearinghouse for Yuan
denominated transactions for the whole of Africa following the agreement.
Beijing
also signed agreements to develop infrastructure in Nigeria, part of a drive to
deepen its ties with Africa. It has offered Nigeria a loan worth $6 billion to
fund infrastructure projects.
Also,
ICBC signed a $2 billion loan deal with Dangote group, the company owned by
Africa’s richest man, Aliko Dangote, to fund two cement plants it plans to
build, Lin told Reuters.
China’s
official Xinhua news agency cited President Xi as telling Buhari that there was
huge potential for economic cooperation, naming oil refining and mining.
Nigeria
is also considering issuing Panda bonds (mainly Yuan denominated) as against
euro bonds because they are cheaper.
SOURCE: thewillnigeria.com
