By Nuel Suji – The Central Bank of Nigeria (CBN) and the Peoples Bank of China (PBoC), have signed a bilateral currency exchange deal that would ease business transactions between Nigeria and China.
The deal, which is purely an exchange of currencies, would 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 and provide Chinese currency (Renminbi or Yuan) for Nigerian doing businesses in China.
A statement by CBN spokesman, Isaac Okorafor, Thursday in Abuja said, “indeed, the deal will protect Nigerian business people from the harsh effects of third currency fluctuations.”
Specifically, the agreement signed by CBN Governor, Godwin Emefiele, and Governor of PBoC, Yi Gang, is valued at 16 billion Yuan (about $2.5bn).
The negotiation which started two years ago is now at execution stage. It would provide the Chinese and Nigerian currencies directly to industrialists and other businesses from both countries.
“Among other benefits, this agreement will provide naira liquidity to Chinese businesses and provide RMB liquidity to Nigerian businesses respectively, thereby improving the speed, convenience and volume of transactions between the two countries,” CBN said.
“It will also assist both countries in their foreign exchange reserves management, enhance financial stability and promote broader economic cooperation between the two countries.”
The statement explained that Nigerian manufacturers, especially SMEs and cottage industries in manufacturing and export businesses, can easily to import raw materials, spare-parts and simple machinery without the difficulties associated sourcing dollars.
Nigeria is one of China’s largest trading partners in Africa.
