Quote from Ndubuisi Ekekwe on May 3, 2018, 9:43 PM

Since I wrote that Nigeria has signed a currency swap with China, many have commented that this could possibly annihilate our manufacturing sector.

With the ease this swap deal will bring to Nigerian companies, there is no reason for any company to buy something which can be found in China in any other place. Going forward, dealing with Chinese partners would be as simple as paying a local Nigerian company. This is significant and more Nigerian importers and manufactures will certainly bias to buy from China. All the troubles of dollars, pounds sterling and euro will fade at least in one area.

That is not likely going to happen. I am very confident that this deal will benefit Nigeria’s manufacturing sector. This is likely what CBN will do: cover raw materials, machinery or equipment and  importation with the currency swap. For those buying toothpicks and jewelry, CBN will require that you source your forex alternatively (i.e. buy USD and wire to your Chinese partner).

Today, you only get CBN-favorable rate if you are purchasing equipment, machinery or raw materials. So, if that stays for the currency swap, Nigeria’s manufacturing sector will benefit as import of equipment, machinery and raw materials will be easier. For the yoyo-buyers [toothpicks, jewelry, etc], this currency swap deal may not cover you. Simply, with thorough compliance, our manufacturing sector will experience net positive for this swap deal.