Currency swap’ll reduce substandard products importation – CBN

The Central Bank of Nigeria (CBN) has said the currency swap deal entered into by Nigeria and the Peoples Republic of China will drastically reduce the importation of fake products from China.

The Acting Director, Corporate Communications of CBN, Mr. Isaac Okorafor, disclosed this yesterday at the naira/renminbi swap deal engagement with stakeholders from North Central Zone held in Abuja. The event saw importers/ exporters and members of the Abuja Chamber of Commerce and Industries in attendance.

Based on the deal, China will make available to Nigeria 15bn renminbi and Nigeria will make available N720bn - both are the equivalent of $2.5bn.

“The products products substandard you see are that are bought through informal channels. With this deal, trade will follow the formal channel. You won’t see any cash. We will also work with all the relevant regulatory organisations like SON and NAFDAC so that imports are only through companies that adhere to global standards,” Mr. Okorafor explained, adding that all black market deals would be eliminated completely.

He also said the deal would help reduce the pressure on the demand for the dollar and help preserve Nigeria’s foreign reserve.

“China accounts for a third of our imports, which means imports from China constitute huge burden on the foreign reserve. Thus this currency swap will reduce the demand for the dollar for imports by at least one third,” he assured.

He also noted that the measure “will enable us hold our foreign reserve so that investors will have confidence on our economy because they know anytime they want to take their money out, they will always have dollars.”

Already, last Friday, the CBN offered for sale 69,707,333.39 renminbi in the spot and short-tenored forwards.

Mr. Okorafor said the exercise which was in tune with the CBN guidelines, were for the payment of renminbi denominated Letters of Credit for agriculture, as well as raw materials. He added that the sales in the Chinese Yuan were through a combination of spot and short-tenored forwards arising from bids received from authorised dealers.

In his remarks, the President of the Abuja Chamber of Commerce, Prince Adetokumbo Kayode, said sensitisation of stakeholders on the deal would impact on the utilisation of currency swap opportunities.