China is the most populous country in the world with the population estimation of over 1.38 billion people, unlike Nigeria; Chinese population is a great advantage to her economic stability because the government has been able to use her population strength for the nation’s industrialization. The foundation of Chinese prosperity started with the revolution of 1911-12 which overthrew the decadent Manchu dynasty. This growth was further restructured, consolidated and entrenched with Communists victory in 1949. The Chinese prosperity through the Communists party was one of the major contributions of Mao Tse-tung to the Chinese development and no doubt his thought is the prevailing philosophy of the new China that have altered the balance of power in contemporary international relations.
Nigeria on the other hand is the most populous country in the Africa Continent with the population of over 170 million people.Before the discovery of oil in the country, Nigeria was ranked as one of the highest exporters of agricultural products but due to military interventions, tribal sentiments, corruption and bad governance Nigeria has not been able grow at the pace the founding fathers projected it to grow during the nation’s independence in 1960.
Chinese relationship with Nigeria did not just start today, even before Nigeria established formal diplomatic relations with the People’s Republic of China (PRC) on Feb. 10, 1971 both nations have been into trade relations. China is considered one of Nigeria’s closest allies and partners; hence Nigeria is seen within the international community as a pro-Chinese nation. This is seen by the volume of Chinese projects all over the country, there is hardly any home or office in Nigeria that does not have one or two Chinese projects. Also at the level of participatory diplomacy the two nations are good associates, even as the Chinese government has over the years has shown a close interest in the emergency of Nigeria as a Permanent Member of the United Nations Security Council.
Therefore the current relationship between the two countries in the area of currency swap is an avenue to consolidate on the already established cordial relationship by both nations as developing partners, who share common historical relationship as late comers in the modern international politics. Over time Nigeria has considered her relationship with the PRC as the relationship of equals, this is unlike her relationship with the Western Industry nations which is characterized with conditions and inequality.
For purposes of clarity, what the currency swap means is that Nigerian and Chinese business men and women would not need the dollar when they do international business with each other. Yuan will now be directly used. During the old order, a Nigerian importer needs to buy dollars from the bank (or black market) in order to pay for Chinese goods and services, which are priced in dollars. This automatically puts pressure on the exchange rate. The dollar is then converted to Yuan. In between, conversion charges are incurred. Now Chinese exports to Nigeria will be priced in Yuan. It is important to also state here that at the international market, the US dollar, British Pound and the Japanese Yen are the three major currencies for exchange and trade transactions. Therefore this current arrangement may be helpful because naira to dollar exchange rate is on the increase and as an emerging market Nigeria cannot afford to continue in unprofitable ventures.
It is safe to say that the Central Bank of Nigeria (CBN) made a bold move in its controversial management of the exchange rate crisis; a move that some analysts believe may ease the demand pressure on the dollar, even if the gains would only be peripheral. However, unlike many currencies, the exchange rate of Yuan is not tied directly to the dollar. Rather, it is determined by a number of currencies, even though the dollar is still a key determinant.
Notwithstanding the above economic policy postulations, international relations experts are worried that the policy will cripple the nonaligned posture of the Nigeria foreign policy and further create room for a new neo colonialism, this time around by China, thereby making Nigeria depend on Chinese goods thus killing the local production, this is because by this policy it becomes cheaper to import from China. Albeit some development experts have advised that the policy should be strictly monitored and that importers should only be given the option to bring in only capital goods and that the two nations should look at their areas of comparative advantage by way of interdependence.
However, it is a an established fact that the free world may not stand and watch this marriage between Nigeria and China to materialize, having refused to devalue the naira against the advice of IMF and the World bank, Nigeria must trade carefully and use this opportunity to expand her local production, this is also in view of the fact that America has constantly accused China of not respecting intellectual property and copy right.
Nigeria is no longer a baby in international relations therefore she should not allow China exploit her by penetrating her large consuming markets with a lot of Chinese goods which can be produced locally, for the avoidance of doubts there is no project that Nigeria will import from China that she does not have the potential to produce, only if she can restore electricity and empower industrial cities like Aba.
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