The Central Bank of Nigeria (CBN) has disclosed that the new Nigeria-China currency swap deal would not cover the importation of the 41 items banned in its 2015 circular on items not valid for foreign exchange.
Mr. Isaac Okorafor, CBN’s acting Director, Corporate Communications, disclosed this in Abuja.
Why this move
According to Okoroafor, this is to ensure that the currency deal does not stifle local companies and make Nigeria a dumping ground for Chinese goods.
“the 41 items that had initially been banned from the Nigerian Foreign Exchange Market will still not qualify under the deal.”
On June 23, 2015, in its bid to sustain the financial stability of the foreign exchange market and ensure effective utilization of the foreign exchange, the CBN in a circular placed a ban on accessing foreign exchange in the official foreign exchange market for the importation of some goods and services.
The aim was to encourage local production of these items, conserve foreign reserves, resuscitate domestic industries and improve employment.
Some of the items banned were rice, cement, poultry, tinned fish, furniture, toothpicks, kitchen utensils, tableware, textiles, clothes, tomato pastes, soap, and cosmetics.
Also banned were private jets, roofing sheets, metal boxes, wire rods, steel nails, security and razor nails, ceramic tiles, glassware, cellophane, plastic and rubber products.
According to Okorafor with the Nigeria-China currency swap deal, the Naira is expected to appreciate against the US dollars as the demand for dollars eases noting that China accounts for a quarter or more of imports into Nigeria.
He further revealed that the exchange of currencies between the Nigerian Central Bank and the Chinese Central Bank will make it easier for Nigerian entrepreneurs to have direct access to foreign exchange in Renminbi.
“As we speak, the modalities, the operational manual, and the guidelines are being developed. But I can assure you that the exchange rate will be such that it will be competitive, fair to all and will not hurt our local producers and importers.”
He explained that the two Central Banks are still working on the exchange rates between the Naira and Renminbi.