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CBN’s CNY1.2b interventions and forex developments | The Guardian Nigeria News – Nigeria and World News

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(FILES) This file photo taken on August 8, 2018 shows bundles of 100 yuan (14.6 USD) notes at a bank in Shanghai. (Photo by Johannes EISELE / AFP)

Averts over $178m spot pressure on reserves, exchange rate
The week-long visit of President Muhammadu Buhari to the People’s Republic of China between April 11 and 15, 2016, was alongside the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, in a last push to secure a three-year Bilateral Currency Swap Agreement worth CNY15 billion (N720 Billion), among other things.

On June 6, 2018, CBN issued the Regulations for Transactions with Authorised Dealers in Renminbi, which provided the framework for implementations. The apex bank and the People’s Bank of China executed the Currency Swap Agreement on behalf of their respective countries.

From July 27, 2018, when the first intervention under the Naira-Yuan Swap deal was executed, till date, the Central Bank of Nigeria (CBN) has put in an estimated CNY1.185 billion.

The interventions, during the 12-month period, done at various exchange rates, ranging from N48 to N58 per CNY, at an average of N54/CNY, had been estimated at N64.02 billion.

On the other hand, the above values, when converted at an average dollar exchange rate at N360 per dollar, amounts to $177.8 million. This amount, however, represents “spot” pressure that would have affected the reserves and exchange rate, but averted by the initiative.

So far, the interventions on the N720 billion three-year swap deal are still below 10 per cent of the total value after one year of operations, an indication that the CBN-driven bilateral intervention has more to offer to Nigerian businesses with interest in China.

Beside the fact that the opening of the futures window provided the opportunity for most importers to quote dollar exchange rate ahead, as opposed to spot purchase, the swap deal opened up new window for the management of the country’s reserve without immediate depletion of the value, while importers’ financial transactions would be facilitated easily.

The move thus became imperative given burgeoning bilateral deals and the challenge of converting to dollar before consummating transactions, that is, removing the need to first source the dollars before payments for transactions involving Yuan and Naira.

The apex bank had indicated at the commencement of the intervention that the sales shall be through a combination of spot and short-tenored forwards and shall be a Special Secondary Market Intervention Sales (SMIS) retail, dedicated to the payment of Renminbi denominated Letters of Credit for raw materials and machinery and agriculture.

The bank’s spokesman, Isaac Okorafor, had explained that due to the peculiarity of the exercise, CBN would not be applying the relevant provisions of its Revised Guidelines for the Operation of the Inter-bank Foreign Exchange Market, which direct all SMIS bids to be submitted to the CBN through the Forex Primary Dealers (FXPDs).

He also said the CBN would also not be applying the relevant provisions of the Guidelines which equally provide that “Spot FX sold to any particular end-user shall not exceed one per cent of the overall available funds on offer at each SMIS session”.

Okorafor further explained that there would be no predetermined spread on the sale of forwards by authorised dealers to end-users under the Special SMIS-Retail, adding that authorised dealers would be allowed to earn 50 kobo on the customers’ bids.

It was purposely executed to finance trade and investment between China and Nigeria; maintain financial market stability; and facilitate other connected purposes as may be agreed upon by both countries.

The deal created a platform that provides Naira liquidity to Chinese companies and investors looking to do business with Nigeria on the one hand; and provides Chinese Yuan liquidity to Nigerian companies and investors looking to do business with China on the other hand.

Available data showed that between 2013 and February 2016, Nigeria received $213.4 million worth of capital inflows from Mainland China, just 0.4 per cent of $52.4 billion total capital importation into Nigeria within the period, ranking as the 18th largest source of foreign capital inflows into Nigeria.

Including the autonomous region of Hong Kong, total capital flows from China was $484.2 million within the period, still less than one per cent of total capital importation into Nigeria.

On the other hand, trade relations have been rising with merchandise trade between the two countries estimated at $30.6 billion between 2013 and 2015, 8.5 per cent of Nigeria’s total merchandise trade.

The Balance of Trade was however, heavily tilted in favour of China as import from China was 7.8x Nigeria’s export ($3.5 billion) within the period and China remains one of the few trading partners of Nigeria.

By 2016, CBN had built up stock of external reserves denominated in Yuan from $101.3 million in 2011 to $2.2 billion, representing 7.5 per cent of gross reserves.

Currently, imports by country of origin as at first quarter of 2019, showed that Nigeria imported goods worth N979.3 billion or 26.44 per cent from China. Unfortunately, Nigeria’s export to China pales into insignificance compared to the import.

A technology and agriculture equipment dealer at the popular Computer Village in Lagos State, Allen Williams, told The Guardian that the parent company has benefitted from the swap deal.

“Basically, all we do in recent times is to bid and we have always been successful. Since we do a legal business, we submit our details and our Letters of Credit are approved. The truth is that it has reduced a lot of stress for the company in running around for dollars,” he said.

Specifically, China emerged Nigeria’s major trading partner in terms of import, with items cutting across laboratory, hygienic or pharmaceutical glass ware; motorcycles and cycles; machines for reception, conversion and transmission or regeneration of voice and images.

An economists and importer, Tony Nwaka, said while the currency deal with China is not an effective substitute for appropriate fiscal and monetary policy flexibility in adapting to the lower crude oil prices environment, it is still a positive development that has reduced cost of transaction with Nigeria’s largest trading partner and also ease the immediate foreign currency challenges associated with Nigeria’s negative terms of trade.

Of course, there were concerns at beginning of the deals, Ucha Nwagbo, an economist, noted. “Key risks was the ease of transaction with a highly competitive country like China, which could worsen Nigeria’s trade balance and weaken domestic manufacturing capacity. Yes, the concern was justified and further emphasizes the need to deepen domestic policies on improving competitiveness. Chinese products are everywhere today, both good and bad.

“In any case, it is not bad compared to the level of distortions that would have arisen at the foreign exchange market in the last one year, if the deal was not in place for importers.”

There were initial fears over the deal with China, a country which political ideology swings on almost equal proportion between capitalism and state control, especially when the terms of the deal appeared to be classified. There were questions about how the swap will be exchanged- crude oil or reserves.

An industrialist, Mazi Sam Ohuabunwa, in a monitored programme, had feared that the optimism greeting the Nigeria-China deals may pale into nothing, if the negotiators fail in the contents and terms of the agreement, especially, knowing that antecedents of similar deals on other African countries have not been totally progressive.

Indeed, if Nigeria buys Chinese goods, it would make business sense to use the Yuan, because there is a lot of squeeze for the dollar.

The Chief Consultant of Lagos-based B. Adedipe Associates, Dr. Biodun Adedipe, said that the Naira/Yuan conversion deal has the prospects of shoring up the fortunes of the nation’s currency in the foreign exchange market.

He was optimistic that the initiative would ease trading transactions.

By investors in both countries, as the ordeal of converting the two currencies, first to dollar would cease, giving exchange value advantage to the traders.

The Association of Bureaux De Change Operators of Nigeria (ABCON) said the $2.5 billion currency swap agreement is a positive development that will promote naira’s sovereignty in Africa.

ABCON President, Alhaji Aminu Gwadabe, said the admittance of Yuan into the basket of International Monetary Fund (IMF) currencies signaled a positive direction for the deal and called for the inclusion of licensed BDC operators.

He also urged the CBN to consider diversifying dollar disbursements to BDCs with percentage amount of Yuan to meet the critical needs of their numerous clients travelling to China for personal and business purposes.

Nigeria

Gov AbdulRazaq urges youths to shun drug abuse, other vices

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Gov AbdulRahman AbdulRazaq of Kwara has called on Nigerian youths to shun drug abuse and other vices that could hinder them from realising their lifetime ambitions.

AbdulRazaq made the call on Wednesday when he received members of the state chapter of Scouts’ Association of Nigeria (SAN), led by its Commissioner, Deacon Olabisi Afolayinka, at the Government House, Ilorin.

The governor, who recalled, with nostalgia, his days as a scout boy in Capital School, Kaduna, said that the organisation had contributed immensely to nurturing youths to become good citizens and contribute to the development of the country.

“This is an association that prepares youths on how to be good citizens and how to relate with their fellow countrymen.

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“These are virtues that the youth of today should maintain. In our own days as youths, there were no rampant cases of drug abuse,” he said.

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The governor urged the youth to use their energy for productive ventures and join the organisation to make positive contributions to society.

AbdulRazaq, who was made the organisation’s Ambassador of Peace, promised to live up to expectations by giving necessary support to the body through relevant government agencies.

Earlier in his remarks, Afolayanka said that the constitution of the body automatically made the governor of any state its patron and the president grand patron.

He commended AbdulRazaq for the audience granted the association, saying that this was the first time any governor would be hosting them in the state in the last 21 years.

Afolayanka said that the association was founded to build young boys and girls to make useful contributions to the country.

The SAN commissioner noted that cultism and other vices were not rampant in schools in the past when the scouts held sway.

He urged the governor to continue to support the association for effective discharge of its responsibilities in the state.

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Nigeria

NYSC: Bwari assures Corp members improved welfare

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The Chairman of Bwari Area Council, Mr John Gabaya has assured members of the National Youth Service Corps (NYSC) of his administration’s readiness to improve on their welfare.

Gabaya gave the assurance when representatives of the FCT NYSC Secretariat, and some members of the NYSC 2019 Batch B’, paid him a courtesy visit on Wednesday in Abuja.

Gabaya, who appreciated the team for the gesture, said that it was the duty of the council, as host of the NYSC Orientation Camp in the city to ensure it gave the Corps maximum support.

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He acknowledged the fact that the camp in Kubwa, was faced with infrastructure challenges, adding that efforts would be made to amendments it and bring succour to the corps members.

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“The council, in its capacity, alongside the management of the scheme, would meet and discuss how it would make the development feasible including our best effort to add a little raise to their allowance,” Gabaya said.

Earlier, the NYSC FCT Coordinator, Mrs Waleeda Isa, said the visit was to acquaint its officials with the new administration of the council as host of the orientation camp.

Isa decried the sorry state of infrastructure at the NYSC camp, saying “their lodge in the camp is dilapidated and needs attention”.

“Also, it would go a long way for those who serve under the council, if your administration can kindly add a little to their allowance to augment what the Federal Government is giving them.

“We will be honoured if you make these efforts so that we feel your presence and know that you have us at heart,” she said.

The News Agency of Nigeria (NAN) reports that the NYSC 2019 Batch B’ corp members have reported and would be inaugurated at the orientation camp on Aug. 22.

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Nigeria

Lagos govt boosts MCC services in Eti-Osa Tribune Online

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THE Lagos State Government says it has completed yet another Maternal and Childcare Centre (MCC) located in Eti-Osa Local Government Area of the state to increase residents’ access to qualitative maternal and child healthcare.

The state Commissioner of Health, Prof. Akin Abayomi, made this known on Wednesday in Lagos during an advocacy meeting with community leaders and residents of Badore.

Abayomi was represented by the Director of Projects, Ministry of Health, Dr Olusola Oduwole.

He said that the continuous implementation of strategic maternal child survival interventions, policies, programmes and projects by the government was geared toward the reduction of maternal and child mortality in the state.

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According to him, the local and national statistics of maternal and child mortality and morbidity rate are of utmost concern to the government hence, the adoption of various strategies to combat it.

“One of these strategies is the construction of MCC, a specialised healthcare centre for mothers and children.

“It is aimed at taking maternal and child healthcare closer to the people by reducing the travel time and improving the quality care to the highest possible standard,” the commissioner said.

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Abayomi said that the MCC was located on Ogombo Road along Abraham Adesanya Estate in Eti-Osa local government area.

According to him, the facility is a four-floored 110-bed complex designed to respond to maternal and child health issues.

“It will provide quality services for the restoration, improvement and promotion of the health and well-being of women, babies and children in the local government area and adjoining communities.

“It has two theatres where surgeries can be done; consulting rooms; treatment rooms, antenatal and postnatal wards; baby nursery; pharmacy, laboratory and offices, among others,” he said.

Abayomi said that the construction of MCCs in the state was designed to stem the tide of maternal deaths which occurred as a result of delivery by unskilled birth attendants, haemorrhage, infection, obstructed labour and malaria, among others.

He said that women should not die in the course of life procreation process.

“The concept of the construction of MCCs was mooted with the conviction that these interventions will impact positively on the health indices of our mothers and children who constitute a significant percentage of clients attended to at public health facilities.

“The Eti-Osa MCC will commence operation before the end of the week and will serve as a referral centre to all primary health facilities in Eti-Osa local government and accompanying communities.

“It will yield the much desired and anticipated impact towards the reduction of maternal and child mortality in the area,” the commissioner said.

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Nigeria

Psychiatric resident doctors vow to continue strike %

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THE Association of Resident Doctors, Federal Neuro-Psychiatric Hospital, Yaba, has resolved to continue its ongoing indefinite strike demanding for optimal mental healthcare for patients.

The President of the association, Dr Afeez Enifeni, said in a statement on Wednesday, in Lagos, that the strike would continue until the management addressed the work experience of the overworked doctors.

Enifeni said that the doctors had on Aug. 19 held a meeting to review the current industrial action.

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The doctors accused the hospital management of being insensitive to the plight of the in and outpatients, who according to him, are receiving suboptimal mental health services.

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“The hospital management has blatantly refused to replace the annual exit of resident doctors for the past four years.

“Instead, they have let patient load and clinical work increase significantly for hapless resident doctors whose health and academic pursuits have suffered irreparably.

“In light of the above, the management’s insistence on employing only five locum doctors is highly provocative of our demands.

“It hardly improves the status quo which already puts overworked resident doctors at the brink of academic failure, health challenges and malpractice suits,” he said.

He urged President Muhammadu Buhari to prevail on the hospital’s management to do the needful in line with the administration’s next level agenda.

The News Agency of Nigeria (NAN) recalls that the resident doctors had embarked on an indefinite strike on July 31 over non-employment of more resident doctors at the hospital.

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Nigeria

AIDS: Society says self-stigma more destructive than HIV/AIDS

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THE Coalition of Civil Society Network on HIV/AIDS in Nigeria (COCSNHAN) on Wednesday said that self-stigma was more destructive to people living with HIV than the disease.

Mr Ikenna Nwakamma, first Co-chairman of the society, told the News Agency of Nigeria (NAN) in Abuja that it was the major reason people living with HIV default from treatments.

Nwakamma, who called for the incorporation of mental health services in the national HIV programme, said it was imperative to rescue patients from the dangers of self-stigma.

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“Very important, the issues of self-stigma is hardly talked about and that is even more destructive; it is the major reason people living with HIV default in their treatment,” he said.

The society’s co-chairman explained that mental health would make people living with HIV become co-managers of their health.

According to him, mental health problems among people living with HIV is the new epidemic and we must deal with it squarely.

Nwakamma restated the plans of the society to set up a monitoring system that would capture and report cases of stigma and discrimination in health facilities.

He promised that any identified case would be used to send a strong warning to others.

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