By Nse Anthony-Uko
(Sundiata Post) – The Central Bank of Nigeria (CBN) has said it will be giving incentives to importers who bring in invoices in renminbi instead of in dollars, assuring that it has a strong capacity to defend the naira ahead of expected outflow of foreign exchange on the back of the rate hike by the United States Federal Reserve.
The Bankers Committee is also planning to bring on board the financial industry not less than 40 million Nigerians who have been excluded from the industry over the next three years as a way to meet up with the 2020 financial inclusion target.
Rising from the Bankers Committee meeting which comprise of chief executives of banks and regulators, the Chief Executive of Stanbic IBTC, Dr Demola Sogunle said encouraging importers to pay for machineries, equipment and goods in renminbi will further strengthen the foreign exchange reserves of the country.
CBN Director, Banking Supervision, Mr Ahmad Abdullahi had noted that the external reserves of the country has grown to $48 billion.
According to Sogunle, importers who bring invoices in renminbi will be getting a percentage spread on their payments.
He said the decision jointly made by the CBN and the Bankers Committee, is to encourage importers to receive invoices in renminbi instead of dollars. “One of the incentives will be that a percentage spread which is yet to be determined will be given to any importer that is bringing renminbi invoice for settlement instead of bringing 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.”
The Managing Director and Chief Executive of Keystone Bank, Obeahon Ohiwerei, explained that the percentage spread being given will be asides the reduction cost in mark up prices when invoices are issued in dollars. According to him, “anytime invoices are obtained in dollars for an import from China there is usually a 10 per cent mark up, so that 10 per cent, is a plus for the importer.”
The CBN had signed a currency swap agreement with China which gives the country access to RMB15 billion. This means importers who get invoices in renminbi will pay less naira than their counterparts that import from China and get invoices issued in dollars.
Meanwhile the CBN said despite the mixed signals in the economy, it remains confident of being able to continue to defend the naira. CBN Banking Supervision Director noted that despite rise in Fed’s rates, global trade war and a cut in tax by the United States government ant its attendant effect which may include outflow of capital form the Nigerian economy, “the CBN is prepared for any outflow.”
This assurance was also given by the Managing Director of United Bank for Africa (UBA) Kennedy Uzoka. Stating that the external reserves of the country is high, he said “regardless of the messages that we are getting from abroad that things are getting in the reverse but Nigeria with the good work of the CBN has been able to manage it and we are now in a good position to manage the forex market development.