Importers with Chinese Yuan invoices to get 10% discount

The Central Bank of Nigeria (CBN) in partnership with deposit money banks in the country said it is offering a 10 percent mark-up as an incentive to importers with Renminbi invoices from Chinese exporters.

This was made known on Thursday in a CBN-led Bankers’ Committee meeting comprising of Chief Executive Officers of commercial and merchant banks in Lagos.

The discount, which would make importation from China cheaper, was meant to encourage importers to bring Renminbi invoice for settlement instead of dollar invoice, as a measure to protect Nigeria’s foreign exchange reserves.

Recall that the National Bureau of Statistics (NBS) revealed in its recent foreign trade in goods statistics report that China remains Nigeria’s major import trading partner with 21.1 percent share of Q1 2018 import trade.

Nigeria had signed a 3-year renewable bilateral currency swap deal with the People’s Bank of China (PBoC) worth about $2.5 billion.

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The amount, when converted to local currencies worth 15 billion Renminbi (RMB) or N720 billion is expected to allow direct exchange of RMB and naira for the purpose of trade and direct investment between the two countries.

Speaking at the end of the meeting, Stanbic IBTC Bank Managing Director Demola Sogunle, said the percentage spread of the incentives is yet to be determined.

“So, when you look at the overall cost, in terms of naira, if you bring Renminbi invoices, it is going to be cheaper for the importer coming to the CBN to get foreign currency, which in this case will be Renminbi.

“The importer will have to bring lesser amount of naira. If he goes ahead to bring from the same supplier, based in China and makes the invoice in dollar, it is going to cost more, in terms of the naira amount he is going to use to get the foreign currency,” he added.

Sogunle noted that if the country was able to bring in machinery and equipment, without depleting the foreign reserves, the external reserves would not be under threat.

Also speaking, CBN Director, Banking Supervision, Ahmad Abdullahi, said the drop in inflation rate to 11.61 percent in May and $48 billion in foreign reserves as well as 2.44 per cent projected Gross Domestic Product (GDP) growth for 2018 serve as positive indicators for the economy.

By Oluwasegun Olakoyenikan….

 

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