President Bola Tinubu is expected to be in China from September 4 to 6, representing the fifteen West African countries of ECOWAS at the China–Africa Cooperation Summit.
As the Chairman of the Authority of ECOWAS Heads of State and Government, the Nigerian leader will discuss regional peace and security with President Xi Jinping, according to Ajuri Ngelale, the presidential spokesperson, who briefed State House correspondents on Tuesday.
However, most Nigerians want Tinubu to discuss 2018 Yuan/Naira swap deal, which seemed to be in limbo for quite sometime now.
According to them, the ongoing challenge of stabilising the naira/dollar exchange rate, which has almost crippled the economy has heightened calls on government to revisit the once hyped swap deal which many now fear may have been bungled.
The Naira/Yuan currency swap would have allowed Nigeria to borrow Yuan and lend naira for purchases from China, by simply short-circuiting the process of converting the Nigerian currency to a dollar before the further conversion of the dollar to Yuan.
The policy was expected to have significantly eased the pressure on the dollars and consequently stabilize the ailing local currency, naira, experts say.
The expectation is that the swap will shift activities to the Yuan and creates a breather for the dollars which through which our major transaction of naira are carried out.
“The currency swap between the CBN and ICBC was also expected to facilitate direct trade. This entails trading without dollars, so there is less demand for dollars.
Nigerians expected that the exchange rates unification and subsidy removal induced economic challenges with the accompanying hardships would have been minimal if the policy was on course and effective.
“Nigeria-China currency swap agreement has not been able to curbe the pressures on the exchange rate and external reserves of Africa’s largest exporter of crude, as envisaged about six years ago,” says an analyst, who pleaded for anonymity.
“We expect the swap issue to top agenda of the meeting if only to show that president Tinubu is committed to his ‘Renewed Hope’ agenda,” Friday Ameh, energy analyst, in an email message to MBN.
Also, the stakeholders say the visit comes at a critical time, as Nigeria and its regional partners face mounting tensions over an unresolved $70m dispute with the Chinese firm, Zhongshan Fucheng Industrial Investment which led to the seizure of the nation’s properties including three of its presidential jets in France and Switzerland under a UK High Court order.
The seizure is part of Zhongshan’s attempt to retrieve its $70m in an arbitration award against Nigeria in a botched 2013 deal with the Ogun State government to build a free trade area in the state, Zhongfu stated that the state, through a “campaign of illegal acts” backed out of the agreement and wanted to overturn their 60 percent investment in the project.
Other Nigerians feel the leaders did not give the issue the much needed attention which could have avoided the international embarrassment of seizures.
They wonder how and where were the country’s leaders and legal officers and advisers that items and properties that should be under sovereign immunity covers, as they are not for commercial purposes, are being seized.
Last year, for instance, the country was denied state immunity by a UK High Court, which ruled that it had exceeded the time limit for appealing arbitral awards. The arbitration was further enforced by the United States Court of Appeals for the District of Columbia, which said that it held the jurisdiction under the US Foreign Sovereign Immunities Act.
“Yet, both the leaders and aides did not act until the commencement of the international humiliation and embarrassment,” says a concerned Nigerian.
However, the general consensus is that the president’s visit would present a new opportunity to address these issues, particularly as he seeks to broker peace talks with the sovereign leader of the second most powerful country in the world.
The Nigerian government has already said that it is “not under any contractual obligation” with Zhongshan and accuses them of using the case to “strip our offshore assets.”
Bayo Onanuga, presidential spokesperson, stated that the dispute is between Zhongshan and Ogun State, asserting that the company had no solid ground for restitution, as their only accomplishment in the free trade area was erecting a perimeter fence.
The presidency promises to work with the Ogun State Government to “discharge this frivolous order in Paris.” “Nigerian Government will always work to protect our national assets from predators and shylocks who masquerade as investors,” Onanuga said.
Following the alleged dollarisation of the economy and poor showing by the local currency, some concerned Nigerians, including Femi Falana, Senior Advocate of Nigeria (SAN) had last year mounted pressure for diversification of the economy, arguing that the country has been relying on the US dollar but unfortunately, it is realistic that it may not be able to to take us to the promised land.
Besides, they argue that Nigeria currently has the US dollar as its major trade currency, despite having China as its biggest trade partner. Trade between Nigeria and China accounts for nearly one-third of the trade between China and West Africa.
For instance, in June 2023, Falana sent an FOI request to the CBN to disclose the details of the currency swap agreement.
In a response to Falana’s request, the apex bank said the swap deal, which commenced in July 2018, is renewable every three years, adding that the agreement was renewed after it expired in April 2021.
The CBN disclosed that the sum of 15 billion Chinese yuan renminbi (CNY) was the “amount usable within the year”.
The financial regulator said since the renewal of the deal, nine billion yuan have been “drawn”, six billion yuan utilised, while the sum of three billion yuan is outstanding.
According to the bank, out of the six billion yuan utilised, the sum of 5.10 billion yuan had been repaid, while 2.10 billion yuan had not been utilised.
“The swap commenced in July 2018, expired in April 2021, and was subsequently renewed. The sum of CNY 15.00 billion was the overdraft amount usable within the year,” the apex bank disclosed this in a response dated August 8, 2023.
“Since its renewal, CNY9.00 billion had been drawn, CNY6.00 billion utilized and CNY3.00 billion outstanding, and out of the CNY6.00 billion utilized, the sum of CNY5.10 billion had been repaid, while the sum of CNY2.10 billion had not been utilized, leaving the sum of CNY900.00 million yet to be repaid. Furthermore, the next renewal is expected to take place in 2024,” CBN said
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In May 2018, CBN and PBoC signed a currency swap deal valued at renminbi (RMB) 16 billion (about $2.5 billion).
The swap deal was signed by Godwin Emefiele, the suspended CBN governor, and Yi Gang, the former PBoC governor.
The deal was designed to provide the Chinese and Nigerian currencies directly to industrialists and other businesses from both countries.
“This agreement will provide naira liquidity to Chinese businesses and provide RMB liquidity to Nigerian businesses respectively, thereby improving the speed, convenience, and volume of transactions between the two countries,” CBN had said after the signing of the deal.
Commenting on the development, Falana claimed that despite the currency swap agreement, the federal and state governments, and business community have been “prevented from transacting business in naira and yuan”.
“The swap was also designed to improve the speed, convenience, and volume of transactions between the two countries. But the International Monetary Fund and the World Bank, which superintend the Central Bank of Nigeria, have colluded with the Central Bank of Nigeria 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.”
The human rights lawyer asked Nigerians to use naira as payment for goods imported from China
Nigerians are looking up to president Tinubu to muster the needed political will and save the economy, through Frank and fruitful deliberations with his Chuna counterpart to ensure the country begins to reap the benefits of the deal.
