The Manufacturers Association of Nigeria (MAN) has called for the release of a clear and structured fiscal policy to ensure that the Nigeria-China currency swap agreement truly benefitted the manufacturing sector and the Nigerian economy.
The association made the call in an economic report detailing the implications and benefits of the currency swap agreement in Abuja on Friday.
In outlining the benefits of the currency swap to the manufacturing sector, MAN said access to Yuan liquidity at Nigerian banks would make trading transactions smoother and more cost effective.
It noted that a reduction on the strain on Nigeria’s foreign reserve denominated in Dollars was mentioned among the benefits of the currency swap.
“Micro, Small and Medium Enterprises (MSME) would find importing raw materials, spare parts and machinery from China easier.
“It will in addition enhance leveraging on the technology power of China for Nigeria to attain a sustainable economy,” the report said.
On the other hand, the report detailed that unrestricted access to Yuan at an overvalued Naira exchange rate would encourage importation and stifle local production of goods which negates government import substitution agenda.
This, the association explained would cause de-industralization and unemployment.
“The Nigeria-China currency swap if implemented without appropriate monetary and fiscal policies would bring about challenges which may affect the attainment of national economic aspirations.
“Absence of structured platform for transparent monitoring of the currency aimplementation may result in political and economic crises,” the economic report said.
The association recommends that the Central Bank of Nigeria must ensure constant monitoring so that an increase in demand of the Yuan would not result in depreciation of the value of the Naira.
MM/GIK/APA