Still on Nigeria-China currency swap - THE NATION

SEPTEMBER 14, 2018

By: Osagie Jacobs 

A prominent issue currently engaging the intellect of economic analysts is the currency swap between Nigeria and the Chinese. Currency swap is intended to mitigate the restrictions on trade caused by the non availability of trading currency and foreign exchange fluctuation. It was to overcome these restrictions that Nigeria opted for counter trade in the past. Counter trade is simply the exchange of goods and services between countries. It achieves the same purpose as the currency swap.

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With this bilateral currency swap, a country can exchange its currency for a certain volume of foreign currency. Naira will be provided for Chinese business men and this will be complemented by the supply of Yen to Nigerian businessmen. It will overcome most restrictions to trade and enhance its volume. Since sourcing for the naira will no more be a problem, the  Chinese will now be encouraged to increase their  trading and investment activities in the Nigerian economy.

An unwavering belief that the currency swap will benefit our economy is simplistic. China has all the characteristics to dominate the trade leaving Nigeria a poor player.

The Chinese have demonstrated a remarkable capacity in textiles manufacturing, production of pharmaceutical products, railways and agriculture, but there is no denying the fact that over 60 percent of Chinese products in the Nigerian market are substandard. This is not the same for products from the United States, Europe and Japan.

In a factory having European machines in Calabar where I live, some electric motors and gears have not failed for 39 years. No German made fluorescent lamp has failed for the past 13 years. Chinese products won’t go as far. The Chinese collude with unscrupulous Nigerian businessmen to bring in substandard products including pharmaceuticals from China. In China, such a sharp practice carries the death penalty. This is an indication of our rating by the Chinese – dummies. It is very rare, if not impossible, that any factory in the United States or a European country would undermine the quality of its products whatever the financial inducement. Our factories are dying and they are unfortunately being replaced by those of the Chinese and Indians. You will see this in Lagos, Otta, Port – Harcourt, Ibadan, Kaduna and Kano. It is indeed sad that the Chinese and Indians pay the poorest salaries in Nigeria.

It is demeaning that the Asians now control domestic commodity trading in Nigeria. They were able to hedge out Nigerian produce buyers. They buy produce like Cocoa, Coffee, Groundnut, Cotton, Sorghum, Gum Arabic, Rubber, Palm Produce etc. It was easy for them to do that because they possess large capital. It is, therefore, mind-boggling that the federal government is surreptitiously working towards the complete dominance of our economy by the Chinese.

Our salvation does not lie in currency swap but in the development of our capacities for growth and development. Growth is driven by skills and innovation. It is imperative to put in place critical infrastructure to facilitate development. I call attention to the rudimentary state of our technical knowledge which is incapable to drive growth. In recent years, technical education has received scant attention from the government.  Also, the infrastructure to develop technical skills is not there. Most of our technical schools are dead and the few living are on life-support. Our trade centres which were turning out craftsmen and technologists with two right hands in Lagos, Oyo, Sapele, Owo, Ilorin, Idah, Bida, Bukuru –Jos, Enugu, Kano and Kaduna are no more.

In the year 2016, China built 450 technical schools. This is in a single year and they have built more. In the past, technical skill training workshops like those of the Railways, Electricity Corporation of Nigeria, Railways, Nigerian Ports Authority, Nigeria Breweries, United Nigerian Textiles and the Daily Times Publications were very vibrant. Most of them are dead and those existing are a shadow of themselves.  We now find it difficult to get good fitter machinists, welders (in the real sense of the word), toolmakers, millwrights, industrial plumbers and those skilled in instrumentation and control, thermodynamics, fluid power system and industrial air-conditioning. I should announce that there is no mould maker of note in Nigeria.

UNIDO’s major criteria for rating a country’s technological advancement is the proliferation of machine shop related activities in that country. In this regard, Nigeria is nowhere. It appears nobody is giving a serious thought to this malaise. Our Ministry of Science and Technology and its agencies have been sterile for many years. Our leaders, for lack of knowledge, pay scant attention to technological development. Had our leaders known the meaning of a machine tools factory, none of them would go to bed when the federal government owned machine tools factory in Osogbo died. When Michelin and Dunlop closed their plants in Lagos and Port – Harcourt and left Nigeria, it didn’t elicit any response from the government. This was a serious matter that should warrant an emergency meeting of the Federal Executive Council. Donald Trump had rapprochement with foreign companies threatening to exit the United States as a result of his trade policies.

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Almost all the premises of the dead factories in our industrial estates have been turned into churches. We are casting out and binding demons rather than resuscitating the factories. The credo is, manufacture or perish.

Proactive steps towards industrial development were taken when Prof. Gordian Ezekwe was Minister of Science and Technology under Babagida’s government. A 150-member National Committee for Science and Engineering Infrastructure was set up. Its mandate was to produce a strategic blueprint for Nigeria’s industrialization. These experts in diverse fields came up with a blueprint that is a work of scholarship. It was this assignment that birthed the National Agency for Engineering Infrastructure, NASENI. It is disheartening that this blueprint is gathering dust on the shelves up to this moment. It is very unfortunate that the outputs of our parastatals are not audited against a benchmark. They are over 300 including research institutes. With a near zero productivity they are funded from year to year. What a waste. The lethargy of these parastatals and their not been held to account is a doppelganger that will haunt this country for a long time.

Real growth can be attained by working towards favourable terms of trade. Terms of trade refers to the ratio of a nation’s import prices to export prices. A surplus in merchandise trade indicates that a country is exporting more than it is importing. It is with this surplus a nation’s economy is grown. Real growth is promoted significantly by technology.

The question is why have we been planning to fail? It is the lack of intellectual rigor in our planning that is leading to failed policies and projections. We were promised housing for all in the year 1990. We were also promised that Nigeria would be one the 20 largest economies in the world in the year 2020. Recently, we were promised that the naira will soon achieve parity with the dollar. We revel in fantasies and by so doing mask the reality. It is now a sing song that Lagos is the fifth largest economy out of Africa’s 54 countries. We believe this in real terms. This is a city with much money but without water and light. Mushroom countries around us generate water and light for their citizens. This is a city that if you live in Ketu you have to wake up by 4:30 am to get to your office in Victoria Island by 8 am.

There is need to domesticate a proactive attitude towards growth. We should put in place critical infrastructure and pursue those goals that would add value to our economy.


  • Jacobs JP, FCA writes from Calabar.


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