The Central Bank of Nigeria(CBN),on Wednesday, held a sensitization programme in the North Central Zone, to educate Nigerians on the Currency Swap Agreement by the Bank and the People’s Bank of China(PBoC).
The Workshop which held at the Abuja Chamber of Commerce, provided a platform for the Central Bank of Nigeria to enlighten the business people on the reason for the Swap Agreement, highlights of the Agreement, Operationalizing the Swap as well as documentation requirements of the Swap.
In his opening remarks, the Acting Director, Corporate Communications Department,CBN, Mr Isaac Okorafor, said that the agreement will enable the CBN and the PBoC to exchange currencies, adding that under the agreement, parties will swap CNY15 billion which is equivalent to about NGN720 billion and US$2.5 billion.
He noted that the essence of the Swap is to ensure that people do not queue up trying to fight over dollar in Nigeria, adding that it will also help the country to begin to build its foreign exchange reserves, so that investors will have confidence in Nigeria’s financial system.
Explaining further, he said, “If you are exporting from Nigeria, you will receive your money in Naira, if you are importing from China, you pay in the Renminbi and the Chinese person will receive his money in Renminbi. As trade goes on, both amounts will be depleting, any one who finishes his own can ask for additional funding and it will happen at a rate that is agreed.
“You are not going to see any cash, there is no cash, Renminbi will not be sold in the black market, it will be wired electronically and it is only for imports that originates from China” he said.
Furthemore, he noted that fake products from China will not be dumped on Nigerians, stressing that under the system,the trade will follow the formal channel. “We are also working with regulatory agencies, Standard Organisation of Nigeria, Consumer Protection and all that, to ensure that the Chinese importer is a known one that adheres to global standard”.
Okorafor also noted that, “this Currency Swap, is part of a coherent and internally consistent strategy that started with the new foreign exchange market that we put in place and all the other efforts that we have put in place to ensure that we reduce our dependence on the dollar and to be able to manage our foreign exchange reserve to build it up and to be able to give confidence to our economy.
“It is also aimed at ensuring that our manufacturers who are small and medium can get spare parts easily without having to suffer the cost and delay involved in moving from one currency from Naira to the Dollar and from the Dollar back to Renminbi” he remarked.
Speaking on operationalizing the Swap, the Asistant Director, Financial Markets Department, CBN, Mr. Oreva Eweh, said that the user is supposed to negotiate his invoice in Yuan from China and the request will be submitted to his banker who sends the request to CBN whenever there is Yuan intervention, noting that the Yuan market will be held once every two weeks according to the regulations.
On the pricing, he explained that the currency pair is CNY/NGN, stating that to get the Yuan/Naira rate, one has to know the exchange rate of the Dollar to the Yuan, then multiply, before converting to the Naira equivalent.
On the benefits, he stated that, “The Yuan has fast receipt, the Yuan market tenors are shorter than the tenors in the US$, and it also goes straight, cutting off the third currency transaction and ensuring speed in receipt of currency.
“So far, there has been improvements, when we did the first intervention, we had customers from 11 banks and when we did the second one, we had customers from 17 banks and more banks have opened their corresponding banks where the Yuan will be moved to before the exporter can receive their money.
“By the next intervention, hopefully we will see more than 20 banks coming to that window. This shows that people are beginning to appreciate and I urge you to embrace the window because there is much benefit in it” he ended.
In his welcome remarks, the President of Council, Abuja Chamber of Commerce and Industry (ACCI), Prince Adetokunbo Kayode, noted that the Swap Agreement by the government as believed, will enable Nigerians doing business with China to pay in Renminbi.
He expressed belief that the effort of the CBN at instituting the Swap Agreement, shows the interest of government in promoting trade of Nigerians, both import and export, adding that if the government continues to implement policies that will favour the people, the economy will expand and growth will increase, to bring about a buoyant economy.
The sensitization programme is an effort by the Central Bank of Nigeria, to ensure that more Nigerians are enlightened on the importance of the Bilateral Currency Swap Agreement signed on Friday 27, April 2018, between the CBN and the PBoC.