China Swap Deal: A Minus For Nigerian Exporters

Many have seen the Swap deal with China as a great progress and I wonder why. Some are even saying that it would make us to buy products from China at cheaper rate that is more than 50% and this is a big lie. It is not as cheap as it is painted. It simply means that we will reduce some cross rate charges but not 5times as it is claimed in some quarters.

The rate of the swap is actually about N48 because we swapped $2.35 billion (N720billion) for CNY15billion. So clearly, the conclusion of some writers are exaggerated. This is because when a Chinese says his goods is CNY1000 that is about NGN48,000 according to the new rate based on the swap. 

This same product at the usual or current rate will be quoted by the same Chinese at the rate of USD156.78. If you convert this to Naira it is N56,483. So what we are saving which is not bad in itself is N56 - N48 which N8.

I don't think this is serious progress to trade for Nigerian that is worth celebrating because a number of African countries have signed this kind of deals ahead of us. Moreover, it is not favorable for export because if I export to China and I am paid in Yuan at this rate, I am loosing N8 for every dollar. Obviously, many exporters to China will be sticking to the use of USD for the their export transactions.

Finally, I will like to appeal to the Federal Government and the Central Bank of Nigeria (CBN) that we should begin to sign deals that will help us to grow our export by making it more attractive in order to become an export (especially non-oil export) oriented economy and not perpetuate the current status of over dependent on Import.

This is my humble submission on the much talked about swap deal of the CBN.

Bamidele Ayemibo
bayemibo@3timpex.com