Some Nigerians are jubilating over a $2b loan from China and the so nocknamed the Yuan trading deal.
China wants to lend us 2 billion dollars, but they want to give us in Yuan and not the dollar itself.
They are not handing us cash, but service exchange; meaning if we want to buy iron rods, we buy it from a Chinese company and they pay the company on our behalf. If we want to construct a railway, they will construct it for us and deduct the money out of the loan. In the end, we are bound to award contracts to them, cutting out competition from others and fairplay to others (non Chinese companies can’t bid or compete to reduce the costs). They get to value the contract and determine the price, meaning they can sell something worth 200 Naira for N2000 and we don’t have a choice because it is on credit.
The worst of it is that China wants us to pay back in dollars, that is not all, we are moving our foreign reserve to fake currency (Yuan) a currency that is manipulated openly by the Chinese government. Did anyone ask Lamido Sanusi what happened to some of our reserves he moved to Yuan few years ago? They sold us Yuan at 4 to a dollar, only to devalue their currency few weeks later to 9 Yuan per $.
Many Nigerians don’t know that even Chinese companies don’t want yuan, nobody wants it, Chinese foreign reserve is in dollars, China is the largest holder of US bonds, they want dollars by all means.
Also, China have more lobbyists in Washington DC than any other nations on earth, begging American politicians to always make policy decisions in their favour, how can such country save us from USD? Has anyone asked why China hasn’t built any refinery in Nigeria?? They have the money, they want the profit, but never did it.
If China does anything against Washington’s interest in Nigeria, USA that has too much political power over China will just tell them not to do it. China will continue to inflate the contract price, refuse to complete the project and deceive us further.
I don’t blame Chinese leaders for trying to scam us, I blame our leaders for not being smart enough. What do you expect when you have political hacks negotiating on behalf of Nigeria against smart professionals from China? I was thinking Nigeria political leaders will do research about Chinese lobbyists in Washington and understand the interest they are protecting before believing in this Chinese version of Trojan horse called the Yuan Trading deal.
We are the only ones that can help ourselves, let’s implement true federalism system and free market. Development is a culture and not a product, we can’t buy it no matter how much money we have or borrow.
You must be living in a PARALLEL universe if you think that Nigeria’s intention of being a clearing house for the Yuan in Africa means the naira will now hold steady.
If you like, tie your currency with Thailand Baht or Ghanaian Cedi, the value of your currency will always have the value it deserves.
Hong Kong for instance is an administrative region of China, but guess what, its currency is firmly tied to the US dollar!
The Yuan is not automatically going to be operating independent of the dollar to boost the naira in any way.
The only thing that has happened here is that the Yuan becomes an accepted currency of exchange to facilitate direct business with Chinese people. This will not in anyway strengthen the naira but the gains will be in the avoidance of double exchange from dollar to Yuan.
The Yuan will swing with the wind depending on what happens to the world’s controlling currency, the dollar.
The naira will continue its natural descent as we produce and export very little and even trade with China becomes very expensive as the world’s comparative exchange rate will not wait for the Naira/Yuan pretend marriage.
The value of the naira will continue to be subject to the international exchange rate, which is controlled by and inextricably linked to (you guessed it?) the DOLLAR!
The silly idea that this arrangement could crash the dollar is only palatable to people living in a cocoon, in a cuckoo land (Nigeria), with a totally warped sense of reality.
The real winners here are the Chinese who have found another place to ship their milling population to recolonise on the cheap.
Nigeria has taken the path of double parallel which will be unsustainable in the medium term as a consumer nation.
The naira will continue to fall unless you can sell more oil or start exporting something the rest of the world would pay you for.
My projection for the naira is 500 to $1 by year end if the oil price does not improve drastically and we sell oil, the only thing we ‘produce’.
By Economists
M. Amuchie & G. Otobor
Stupid write up. What did you expect from the Chinese? They should tie up deals with us at a loss? Who does that? Nigeria stands alot to gain from the deal. Even if the Chinese will gain more. By the way which other options do you have? You claimed the infrastructurAl deals will cut off competitive bids? Which competition in the first place? China is all over the world including in the U.S constructing and building structures! They are one of the cheapest and best all over the world. You want European companies to come n bid also so that we will be looking for dollars to pay them with? Especially when all the dollars are buries inside soak aways in abuja…..abeg carry your useless economics go front and park well. The same economics that’s okonjo iweala used in heloing to destroy our country. The type of economics nigeria needs is not inside textbooks. The solutions too will not be textbooks solutions….thank you but no thanks. We got this one….
I weak with this analysis o..The dollar today is 310 Naira and trade between Nigeria and China is 13billion USD per year. To buy this in the black market you are looking at 4 trillion Naira. 13billon USD in Yuan is 84billion Yuan. In Naira this comes to 2.5trillion Naira. I really don’t gerrit Professor economist.
This policy saves Nigeria about 1.5 trillion Naira. And its not a forever deal Prof; in essence if tomorrow the dollar becomes cheaper in Nigeria we can simply go back to buying the dollar and changing it to Yuan like we used to do.
In my opinion this is a master stroke and there’s nothing anyone can do about it.
The United States knows Nigeria is a force to reckon with in Africa and taking down Nigeria would make the refugee crisis brought about by the demise of Libya and Syria look liike kindergaten play. I am 100% sure the world is not ready for that.
Whoever who wrote that seem to hearing one sided information. In the first place. Why did nigeria ask loan other countries? Since early 1990’s china are helping nigeria while western countries seem to be tie up with their own domestic issue.
Politic is not as simply as layman live. So relax. ..
I said in my facebook page our president only went their to shake hands and not to tie up any deal. He doesnt know what to do. Pls come and shake my hands I will borrow you esele akpa. President are you not clapping for me as you did in china
Yes, good talk.I know the Chinese as honest people.But they are good at Hindustan Bai Bai.
It seems you got your information upside & downside up. Pls stop this rubbish & pray for the success of Nigeria. Wait & see. Then now & ever there’s always local content, never heard of it?
Sick right up from a sadistic economist who knows nothing about economy
The dollar is the master; strengthen the economy against the dollar and we can attract the yuan but can’t strengthen the economy against the yuan and expect to attract the dollar.
The dollar will fight back because of the great imbalance of commodity export to import.
This analysis is serious enough to attract comments from mrs kemi Adeosun hon minister for finance pl
What do u expected him to do?i tink d deal s all about game theory
you are in prison for long and you knew nothing about china or business or marketing/……shame better sit down and ask or
@ Cicero: Do you know the directing the world is heading or do you think we exist in isolation? In just a few years we will struggle to break from this pack an we won’t be able to. Nigeria has just been gifted to China. We are about to become a n economic colony of the world’s largest and cheapest producers. Why do you think the Uk and Euro-zone have trade policies that keep Chinese products in check? Are government can be so clueless that their best response to rumblings in our economy is to sell out to the one nation everyone is careful about doing business with. These Band-Aids can’t fix us cos they are culturing within it the very disease agents that will fracture us.
This guys should go back to school. Even a JSS 1 student know that the price of any currency is determined by simple theory of demand and supply. If we do ,80% of our trade with China and we can raise LC in yaun simple logic tells you that the demand for dollar will drop. If the demand drops what happen to the price? If as they claim the USA will manipulate the dollar to be strong against the naira who then cares? By then the volume of transaction we do with the dollar will be reduced. The writers of this piece should have asked themselves why did the pounds and euro not rise astronomically like the dollar? The simple reason is that the demand for those currencies is low. People should use common sense sometimes and not bury their heads in academic text books.
These guys made one other funny assation that the deal will mean that we will buy Chinese’s products and services, what else do you expect? Do you enter into a trade agreement with one country on specific issues and buy the product of another country to execute those issies? Even if it was a deal with the US or Europe would we be buying the product of China to execute the contract of US? Were they told that the deal preclude Nigeria from entering into other deals with other countries?
All these text book economics led us to where we are today, what we need now is commonsense economics and I think this is one. If you do not know, this singular action took the west by surprise, they are still thinking of a reaction to it. Have you heard The Economist respond to it? The answer is NO. IMF wanted to arm twist Nigeria to devalue making it seem as if that was the only way out. My brother, this is a master strolke.
Prophet of doom. Must we always be a slave to the dollar? 30 other countries including the EU and the UK amongst others, are already in the same deal with China. I wonder why your expertise didn’t help the last administration. And OPEC will decide the position of oil, which in turn will decides if the Naira goes up, or down at year’s end.
Thank you Cicero for the post. You are indeed informed. I wonder how the author got the alleged facts he is selling out here. From the first paragraph i sense the pretence of a dunce who disguises as a scholar. Sorry if I sound too harsh, I don’t just like people seeing things from a myopic point of view.
The bilateral tie brewing btw Nigeria and China is a bad omen to common
people….Chinese are no respecter of human rights, national labour laws
and Chinese gvt are historically in support of anarchy….Common people
will brook the effect of this bilateral tie…..Zimbabwe was supposed
to be Chinese annex in Africa but so unfortunately Nigeria offered
herself to China desperately. …China chinoi Nigeria
Nigeriana…Ignorance coupled with desperation is bad for nation
building. When sovereign state A fund sovereign state B, u surely should
understand the consequences.
China is building the best rail lines allover the world, most of the imports to Nigeria are from China, the currency deal is good for Nigeria at this point, eliminating the need for the dollar in doing direct business with China.