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Trade imbalance favouring China raises issues on what Nigeria’ll gain from swap deal
More facts are beginning to emerge on why it was after the Peoples Bank of China (PBC) posted on its website the currency swap deal that the Central Bank of Nigeria (CBN) hurriedly issued a statement on the deal done five days on.
Otherwise, experts in international trade are not comfortable why the CBN is economic with details of the deal and how or what the country stands to again on the long run.
Already, Dean of Banking & Finance Department, Nasarawa State University, Keffi, Prof. Uche Uwaleke, has urged the CBN to communicate details of the deal especially given the fact that the agreement was signed with ICBC and not the Chinese PBC. These details should be uploaded on CBN’s website as soon as the deal is consummated to enable a thorough analysis of its costs and benefits to Nigeria.
According to him, “With Chinese exports accounting for about 80 per cent of the total bilateral trade volumes, it has been argued in some quarters that Nigeria does not stand to reap commensurate benefits from the deal given the large trade imbalance in favour of China”.
Prof Uwaleke said “The flooding of Nigerian markets with cheap Chinese goods has adversely affected domestic industries, especially the textiles sector. The currency deal, the argument further goes, would only reinforce Nigeria’s position as a dumping ground for goods from China and could rubbish the import-substitution efforts of the Federal Government”.
Even though the preparation for the deal had started since 2014, under Dr. Goodluck Jonathan, analysts aver that those opposed to the deal also have fears that it was rather hasty to accumulate a substantial proportion of the country’s foreign reserves in Chinese currency in view of the volatility associated with the yuan and the fact that it is not yet an international reserve currency. “Nonetheless, it is pertinent to observe that asymmetric trade in favour of China can be tackled within the framework of the agreement.