MAN Raises Concerns On Nigeria-China Currency Swap
GILBERT EKUGBE
Acknowledging some positive takeaways, the Nigeria/China currency swap deal could have on the Nigerian economy, the Manufacturers Association of Nigeria (MAN) said unrestricted access to the currency will impact negatively on the nation’s real sector.
The Association in a report also said the Nigeria-China currency swap requires appropriate monetary and fiscal policies if is to be implemented as it stands today to prevent new challenges that may affect the attainment of national economic aspirations.
According to MAN, uncontrolled access to yuan, at an overvalued naira exchange rate will certainly encourage importation and stifle local production of goods; result in upward surge in Chinese imports; negate the Federal Government’s import substitution agenda and discourage domestic production and place local industries in a pitiable and vulnerable condition.
The real sector is one of the largest employers of labour and MAN observed increased chines import could affect the local operators causing them to cut down on employment and leading to de-industrialization especially with the prevailing disparity in the economies of Nigeria and China which put Nigeria at a disadvantage.
The report added that the success of any currency swap depends on the positive impact of the deal on the economy of the participating countries especially when there is a disparity between the countries.
“The success of any currency swap depends on the positive impact of the deal on the economy of the participating countries especially when there is a disparity between the countries. Absence of structured platform for transparent monitoring of the currency swap implementation that may result in political and economic crisis,” MAN warned.
The manufacturers recommended that going forward, the Central Bank of Nigeria (CBN) must ensure constant monitoring of the agreements so that the rise in demand for the Yuan will not result in depreciation of the Naira against the Chinese currency, saying that rise would further widen the gaps in trade balance and balance of payments in favour of China.
“We must encourage Foreign Direct Investment (FDI) inflow, especially into productive and high value-adding agricultural or / and manufacturing processes.
There should be timelines for the importation of products with relative manufacturing advantage in Nigeria to discourage imports urge of finished manufactured products and boost domestic production. Special focus on the use of the scheme strictly for manufacturing inputs and finished products not available locally.
The following measures are worthy of consideration and implementation to ensure that Nigeria benefits maximally,” MAN said.
MAN also called on the need for regulatory agencies like National Agency for Food, Drugs Administration and Control (NAFDAC), the Consumer Protection Council (CPC) and Standard Organization of Nigeria (SON) need to be more effective to ensure that the possible surge in importation from currency swap deal does not turn the country into a dumping ground for inferior/substandard Chinese products.
“The government’s agencies especially the Nigeria Customs Service, should increase surveillance on borders to prevent smuggling and other unhealthy economic activity.
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