The Central Bank of Nigeria (CBN) has said that the Nigeria-China currency swap deal would not cover the importation of the 41 items that were earlier banned in its 2015 circular on items not valid for foreign exchange.
Isaac Okorafor, the CBN’s acting Director, Corporate Communications, made this known in an interview with the News Agency of Nigeria (NAN) in Abuja on Sunday.
According to him, this will ensure that the currency deal does not stifle local companies and make Nigeria a dumping ground for Chinese goods.
Okorafor said that the CBN had already taken adequate measures to ensure that doesn’t happen.
“The fear is unfounded and I’ll give you reasons. The first one is that we are going to focus on exports to China. Also, remember that we already export cassava products to China as well as leather, hides and skin to China amongst others. So this deal will open further the export market to China.
“Also, I want Nigerians to know that the items that will come in are not necessarily finished goods, so the issue of Nigeria becoming a dumping ground for China does not arise.
“This is because the 41 items that had initially been banned from the Nigerian Foreign Exchange Market will still not qualify under the deal,” he said.
The CBN recently signed a bilateral currency swap agreement with the People’s Republic of China worth about N720 billion.
On June 23, 2015, the CBN 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, table wares, 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.
Okorafor said that with the Nigeria-China currency swap deal, the Naira was expected to appreciate against the US dollars as the demand for dollars eases.
“China accounts for a quarter or more of imports into Nigeria. The exchange of currencies between the Nigerian Central Bank and the Chinese Central Bank will make it easier for our entrepreneurs to have direct access to foreign exchange in Renminbi.
“Before now, when importing necessary machineries or merchandise from China, you first exchange Naira for the dollar before changing it again to Renminbi and this puts pressure on the Naira.
“Now what it means is that a large portion of the demand for dollars in Nigeria has been lifted off the back of the Naira and put directly on the Chinese Renminbi.
“And so it is a positive development as it will enhance the value of the Naira and reduce our dependence on the dollar for imports,” he said.