Since giving away the “store” to China, with the Naira-Yuan swap, the Muhammadu Buhari administration has been making strenuous efforts to justify the awful deal.
The intended benefits are to reduce the demand for the United States dollar in trade transactions with China, which account for 70-80 per cent of our imports, and ease the demand and pressure to devalue the naira.
However, the deal falls short of the objectives and may hurt our economy.
Abuja has embarked on this silly spin, of a likely increased Chinse imports, to distract from the horrendous deal, which boils down to the following:
• Nigeria can now buy goods from China using the Yuan (Chinese currency), instead of the dollar. This in turn encourages more imports from China, maybe up to 95 per cent.
Due to our lack of product quality control standards, this may increase the risk of dumping more substandard Chinese products in Nigeria.
In turn, we would pay a higher price, in dollars, consequent upon the negative impact on our manufacturing base (due to the cheap imports), environment (landfill, soil poisoning, pollution etc.) and public health/healthcare resources.
Therefore, the naira remains vulnerable, the demand for dollar unchanged or even increased, while weakening and endangering our economy.
• The new spin of increased Chinese import is a fool’s dream intended to sedate Nigerians. China took us to the cleaners. We will increase imports from China and deplete our dollar reserves in favour of Yuan – a second rate international currency.
In turn, China buys our oil in naira and sells in dollars.
Since we don’t manufacture anything of significance, a condition likely to get worse, due to the disincentive to manufacture encouraged by the currency swap, the only import China will be interested in is our oil.
This it will be very excited to buy more of, in naira, sell in dollars, keep a large inventory of its foreign reserves, in dollars, which it then uses to purchase U.S. Treasury Bills.
This deal means Nigeria hands off dollars (oil) to China and gets Yuan and greater dependence on Chinese products.
• Edward Oparaoji, professor of pharmacy and chairman, Nigerian-American Leadership Council, a think-tank based in Washington DC.
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