The Nigerian freight forwarding community has voiced strong opposition to the proposal being mooted in some quarters about adopting the Chinese Yuan, as an exchange currency against the Dollar for imports into Nigeria.
Amidst concerns about the potential consequences, freight forwarders argue that such a move could destabilize Nigeria’s economic landscape and have detrimental effects on its economy and sovereignty.
Shipping Position Daily recalls that in response to the recent fluctuations in dollar foreign exchange rate and the surge in Customs exchange duty orchestrated by the Central Bank of Nigeria (CBN), a group; the Sea Empowerment Research Center (SEREC) recently called for a reassessment of the CBN’s approach proposing the adoption of the Chinese Yuan as an alternative foreign exchange transaction currency.
The center, in a statement made available to our correspondent by its head researcher, Dr. Eugene Nweke said that the adoption of the Chinese Yuan will alleviate pressure on the US Dollar regime and stimulate positive economic changes amidst prevailing uncertainties.
The SEREC further stated that the proposal follows growing concerns among traders regarding the frequent adjustments to the exchange rate and their implications for international trade dynamics and economic stability.
However, speaking with an array of customs clearing agents from different freight forwarding associations last week, the prospect of introducing the Chinese Yuan as a form of exchange for importation in Nigeria has elicited contentious debates with divergent opinions emerging on the potential implications of such a move.
A Chieftain of the Association of Nigeria Licensed Customs Agents (ANLCA), Mr. Pius Ujubonu kicked against the move, while suggesting an alternative strategy. He advocated for the development of a regional exchange model within the African Union (AU) or Economic Community of West African States (ECOWAS) frameworks.
Ujubonu emphasized the need for a regional currency exchange system to facilitate trade, highlighting Nigeria’s abundance of raw materials and the potential for bilateral trade agreements with China. He also stressed the need for caution, noting that a unilateral shift to the Chinese Yuan could have far-reaching implications for Nigeria’s economy.
“No, I rather suggest we trade in Naira or better still develop a regional exchange model either at African Union level, ECOWAS or Sub Regional levels respectively; regional in the sense that an African exchange currency should be devised. Shipping is not the issue! Nigeria has many raw materials required by China, a counter trade model could bilaterally explore such possibilities” Ujubonu said.
Also speaking, the Deputy National President, Air Logistics, National Association of Government Approved Freight Forwarders (NAGAFF), Dr Segun Musa expressed skepticism about the feasibility of the proposal, cautioning that adopting the Chinese Yuan would exacerbate pressure on Nigeria’s currency and could lead to further imbalance in trade relations.
Musa argued that focusing on achieving a balance of trade should be the priority, rather than hastily embracing alternative currencies without considering the long-term consequences.
“It would definitely not make any difference because it would eventually put more pressure on the Chinese Yuan. The only way out is to expedite action on balance of trade to enhance balance of payment and any other advice different from this is just a fire brigade approach that won’t yield lasting solutions” Musa stated.
Another freight forwarder and Tin Can Chapter Public Relations Officer of the African Association of Professional Freight Forwarders of Nigeria (APFFLON), Mr Clinton Okoro echoed similar concerns, highlighting the risks associated with the potential negative impact on the Nigerian Naira and the country’s economic sovereignty. He emphasized the risk of over-reliance on Chinese currency and the possibility of ceding control to China.
Okoro also warned against further devaluation of the Naira, raising apprehensions about China’s growing influence in Nigeria’s economy due to extensive borrowing from Chinese sources.
On the other hand, the immediate past sole administrator of ANLCA, Mr Babatunde Mukaila expressed support for the proposal, believing that it could discourage the hoarding of dollars for illicit activities unrelated to import and export. He emphasized the potential benefits for import and export trade in Nigeria, advocating for its implementation.
“I believe introducing the Chinese Yuan as a form of exchange rate for importation will discourage hoarding of dollars for nefarious activities not related to import and export. Yes, I am in full support of this; most importantly for the purpose of import and export trade in Nigeria” Mukaila noted.
