DESPITE the clog in the wheel of the naira-yuan swap deal, China continues to dominate Nigeria’s import trade transactions, checks by The ICIR have shown.
The East Asia country is one of the trading partners with Nigeria on import transactions.
Other countries include the United States (U.S.), Belgium, India, Netherlands, United Kingdom, Brazil and Russia.
Majorly, Nigeria imports motor spirit (petrol), used vehicles, gas oil, durum wheat and jet fuel.
A cursory look at five-year reports of the National Bureau of Statistics (NBS) on ‘Foreign Trade in Goods Statistics’ showed that China dominated Nigeria’s import trade while the U.S. followed.
However, many stakeholders are concerned about promoting Nigeria-China currency for transactions.
The Central Bank of Nigeria (CBN) and the People’s Bank of China (PBoC) had in May 2018 signed a currency swap deal.
The deal was designed to provide the Chinese and Nigerian currencies directly to industrialists and other businesses from both countries.
It is expected to improve the speed, convenience, and volume of transactions between the two countries.
But recently, a Senior Advocate of Nigeria (SAN), Femi Falana, pointed an accusing finger at the apex bank.
He said the CBN was frustrating the deal and promoting the dollarisation of the Nigerian economy.
He wrote to the apex bank in June, invoking the Freedom of Information (FOI) and requesting CBN to disclose the details of the currency swap agreement.
He accused the apex bank of promoting “the unwarranted dollarisation of the Nigerian economy.”
Falana argued that despite the currency swap agreement, the federal and state governments and business community have been prevented from transacting business in naira and yuan.
He stressed that the International Monetary Fund (IMF) and the World Bank, which superintend the CBN, colluded with the apex bank to frustrate the currency swap.
“The purpose of the economic sabotage is to promote the dominance of the United States Dollar in Nigeria. Hence, the federal government, state governments, and the business community have been prevented from transacting business in Naira and Yuan. Thus, by compelling Nigerians to pay dollars for goods imported from China, the Central Bank has continued to promote the unwarranted dollarisation of the Nigerian economy,” TheCable quoted Falana to have said.
The human rights lawyer, therefore, asked Nigerians to use naira as payment for goods imported from China.
In response to Falana’s request, the apex bank said the swap deal, which commenced in July 2018, was renewable every three years.
It said the agreement was renewed after it expired in April 2021.
The apex bank claimed that 15 billion Chinese yuan renminbi (CNY) was usable within the year.
According to CBN, since the renewal of the deal, nine billion yuan have been drawn and six billion yuan utilised, while the sum of three billion yuan is outstanding.
Of the six billion yuan utilised, 5.10 billion yuan had been repaid, while 2.10 billion yuan had not been used.
Be that as it may, experts are worried that the dollar has adversely impacted Nigeria’s economy for the past decades.
The effect is depreciation in the naira value, spike in inflation, reduction in investment, increase in debt burden, and decline in foreign reserves.
The IMF reportedly said that a 10 per cent appreciation in the dollar decreased economic output in emerging market economies, including Nigeria, by 1.9 per cent.
Findings by The ICIR on naira-dollar value over the years showed that the naira had depreciated against the dollar by over 141 per cent since 2018, worsening in value to N785.532 per $1 as of September 6, 2023.
At the same time, one yuan averaged N54.68 in 2018 and is currently equivalent to N106.097.
Nigeria’s total trade rise in Q2 2023
In its latest report, the NBS disclosed that Nigeria’s total trade stood at N12.741 trillion as total exports stood at N7.015 trillion and total imports at N5.726 trillion in the second quarter (Q2) of 2023.
Total exports increased by 8.15 per cent compared to the N6.487 trillion recorded in the first quarter (Q1) but declined by 5.20 per cent compared to the N7.400 trillion in the corresponding quarter in 2022.
Likewise, in the period under review, total imports increased by 2.99 per cent compared to N5.559 trillion in Q1 but declined by 10.37 per cent compared to the N6,388 trillion recorded in the corresponding quarter of 2022.
The report showed that while the Netherlands topped the list of Nigeria’s export destinations in Q2, China topped the list of partner countries’ origin of imports to Nigeria.