Fakoyejo OlalekanThe World Bank and the International Monetary Fund (IMF) have been accused by a human rights lawyer, Femi Falana, of sabotaging the Nigeria and China swap deal.
Falana said the global financial institutions are working with the Central Bank of Nigeria (CBN) to frustrate businesses looking to trade in yuan instead of dollars.
What you need to know about Nigeria, China swap deal
CBN and the Peoples Bank of China (PBoC) signed the swap deal on behalf of the West African and Asian countries in July 2018, with ¥15 billion (yuan) usable within the year.
The swap deal is meant to provide yuan to Nigerian traders doing business with the Chinese market and naira for Chinese businesses in the Nigerian market.
At the time the deal was first signed, the central bank had stated that: “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.”
According to the apex bank, the deal is renewable every three years, with the last renewal done in 2021 after the first deal expired in April 2021. The financial regulator in Nigeria said the next renewal is expected to take place in 2024.
CBN made this known in a statement dated 8 August 2023, in response to a freedom of information (FOI) request sent by Falana in June 2023. CBN’s statement was circulated to the media on Tuesday.
Yuan not adequately utilised by Nigerian businesses
The central bank revealed that ¥6 billion has been utilised from the ¥16 billion swap deal between Nigeria and China.
CBN said ¥9 billion has been drawn out of the ¥15 billion, but only ¥6 billion has been utilised, with an outstanding of ¥3 billion from the drawn funds.
However, ¥5.10 billion has been repaid according to the statement, with ¥2.10 billion yet to be utilised, “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,” the statement reads.
Amid the low utilisation, Falana said the World Bank, the IMF and the CBN are colluding to promote the dominance of the dollar in Nigeria by frustrating the swap deal.
“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,” Falana said.
He urged Nigerians to take advantage of the swap deal.
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