By Babajide Komolafe
In apparent bid to facilitate the $2.5 billion currency bilateral swap between Central Bank of Nigeria, CBN, and the Peoples Bank of China, PBoC, Bankers Committee, yesterday, decided to offer foreign exchange incentive to importers with invoices denominated in the Chinese Renminbi.
Managing Director/Chief Executive, Stanbic IBTC Bank, Mr. Demola Shogunle, disclosed this at a press briefing after the Bankers Committee meeting, in Lagos, yesterday.
He spoke alongside Managing Director/Chief Executive, UBA Plc, Mr. Kennedy Uzoka; Managing Director/Chief Executive, Keystone Bank, Mr. Obeahon Ohiwerei; Managing Director/Chief Executive, FirstBank Nigeria Limited, Mr. Adesola Adeduntan; Director, Banking Supervision, CBN, Mr Ahmad Abdullahi; and Acting Director, Corporate Communication Department, CBN, Mr. Isaac Okoroafor.
Last week, the CBN issued guidelines for the execution of the currency swap, saying it would sell 15 billion Renminbi over the next three years.
Shogunle said to attract patronage for the Renminbi sales, the CBN and the Bankers Committee decided to offer incentives to importers that receive Renminbi invoice from their Chinese suppliers.
He said: “Between CBN and the Bankers Committee, the idea is to start to encourage importers to receive invoices in Renminbi instead of US dollars and the incentive would be a percentage spread that is yet to be determined.
“A percentage spread would actually be given to any importer that is bringing Renminbi invoice as settlement, instead of bringing a dollar invoice so that when you look at the overall cost, in terms of naira, if you bring Renminbi invoice, it is going to be cheaper for the importer in coming to CBN to get foreign currency which in this case will be Renminbi.
“The importer would actually bring lesser amount of naira. If he goes ahead to bring from the same supplier, mind you from the same supplier based in China, maybe in Beijing, if he goes ahead to collect invoice in dollars, it is going to cost the importer likely more in terms of the naira amount that he is going to use to get the foreign currency.
“Let’s link it back to what we are talking about on external reserves and the rest. We got almost $48 billion, but because we traded with China and China, being our largest trading partner, if we are able as a country to continue to bring in machinery and equipment without depleting our dollar reserves, then the external reserves will not be under threat.
‘’So the 15 billion Renminbi in place, based on this bi-lateral currency swap, we are in a very good position and that is why it is important to encourage importers to bring invoices in Renminbi instead of dollars.”
Also speaking, Chief Executive Officer of Keystone Bank, Mr. Obeahon Ohiwerei, said: “Anytime invoices are obtained in dollars for invoices that are coming from China for instance, there is usually at least a 10 percent mark-up. So that 10 percent we are saying is like minimum.”