In a positive turn for the Nigerian economy, the Central Bank of Nigeria (CBN) has signed a bilateral currency swap agreement with the Peoples Bank of China (PBoC) that will ease the difficulty of acquiring foreign exchange for manufacturers and businessmen.
The currency swap deal, signed by Godwin Emefiele, the CBN governor, and Yi Gang, PBoC governor, is said to be in the region of Renminbi (RMB) 16 billion (about $2.5bn).
This follows two years of negotiation between both apex banks in a bid to make the Chinese and Nigerian currencies readily available to businesses from both countries.
CBN Spokesman, Isaac Okafor said the landmark deal will greatly reduce the difficulties encountered in the search for third currencies, TheCable writes.
“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,” he 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.”
Okafor added it will now be easier for most Nigerian manufacturers, especially SMEs and cottage industries in manufacturing and export businesses, to import raw materials, spare-parts and simple machinery to undertake their businesses by taking advantage of available RMB liquidity from Nigerian banks without being exposed to the difficulties of seeking other scare foreign currencies.
“The deal, which is purely an exchange of currencies, will also 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. Indeed, the deal will protect Nigerian business people from the harsh effects of third currency fluctuations.”