Arab Today, arab today nigerias buhari secures china deals but currency woes linger
Last Updated : GMT 17:20:01
Arab Today, arab today
Arab Today, arab today

Nigeria's Buhari secures China deals but currency woes linger

Arab Today, arab today

Arab Today, arab today Nigeria's Buhari secures China deals but currency woes linger

While Chinese financing may have secured a temporary economic salve for Nigeria,
Lagos - AFP

Nigerian President Muhammadu Buhari last week assembled one of the biggest ministerial delegations of his presidency and boarded a plane to China.

Welcomed by President Xi Jinping with a 21-gun salute, Buhari embarked on a five-day tour that saw him return to Nigeria smiling after securing a $6 billion (5.3 billion euro) loan and a currency swap deal.

Buhari has been to more than 20 countries since taking office in May last year, when he embarked on a mission to secure funds for an expansionary budget to kick-start the flagging economy.

His frequent trips abroad and more than 200 hours in the air have earned him a nickname -- "Waka Waka Buhari", Nigerian pidgin for "always away".

Chinese financing may have secured a temporary economic salve for a country hit hard by the global fall in oil prices since mid-2014.

But analysts say they would have instead favoured a deal with the International Monetary Fund (IMF) that could have seen a controversial currency peg abandoned and the foreign exchange market liberalised.

"Depending on how much Nigeria can raise from panda bonds -- yuan-dominated debt -- and other multilateral organisations, the need for an IMF bailout may decline," Cobus de Hart, economist at NKC African Economics in South Africa, told AFP.

"That said, we would have preferred the IMF's involvement."

In January, IMF managing director Christine Lagarde visited Nigeria and maintained neither she nor her team had come "to negotiate a loan".

Since then, however, she has urged Africa's largest economy to abandon its strict currency controls and to seek "help from the international institutions".

Reflecting international pessimism, earlier this month the Washington-based organisation downgraded its forecast for Nigeria from 4.1 percent real growth in 2016 to 2.3 percent.

- 'Bought more time' -
Nigeria is refusing to accept the IMF's ultimatum, stubbornly keeping the naira at 197-199 to the dollar while it floats around 320 on the black market.

The policy is designed to stop inflation -- which hit a near four-year high of 12.8 percent in March -- and boost local manufacturing.

The currency swap, which would see more yuan included in Nigeria's foreign exchange reserves, will help Buhari keep the currency artificially strong for a little longer, said BMI Research, a global economic analysis firm, in a recent report.

"President Buhari appears to have bought more time and while we still believe that a limited devaluation... is inevitable, we now do not expect that this will happen for at least six months."

Chinese goods account for the majority of Nigeria's imports, according to the country's National Bureau of Statistics.

The currency deal as a result should ease demand for scarce dollars by making it easier to settle trade deals in yuan.

At the same time, the loan could help Buhari fund some much-needed infrastructure projects.

Yet whether the Chinese agreements will help Buhari achieve his goal of weaning the economy off its dependency on oil exports is another question.

"To the extent that Nigeria's import needs can be met with Chinese goods, an injection of yuan should help," said Alan Cameron, an economist at London-based Exotix.

"However this does little to help economic diversification in Nigeria since most of what it buys from China are finished goods.

"It's not clear whether Chinese support would be invested in projects that generate foreign exchange or reduce local demand for imports.  

"They prefer to invest in infrastructure projects that support the extraction of raw materials or that provide a route to market for finished goods made in China."

- 'Tiny deals' -
Buhari announced a range of deals with China in a number of sectors, including a $55-million granite mine, and transport infrastructure, including a highway and railway worth $3.5 billion.

But John Meyer, a mining analyst at London broker SP Angel said: "These are tiny deals for a nation which is rich in a range of natural resources.

"Where is the investment in oil refining which Nigeria so badly needs so that it can produce its own gasoline and diesel at home?

"Where is the investment in mining for metals and other basic raw materials to feed into further industrial development?"

Investors have been staying away from Nigeria, spooked by the unorthodox monetary policies -- and the China deal hasn't significantly changed sentiment.

"Even if the swap deal alleviates forex pressures to an extent, foreign investors will likely remain on the sidelines," said de Hart.

"Diversification without foreign investors and private-sector participation is infinitely harder."

 

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today nigerias buhari secures china deals but currency woes linger Arab Today, arab today nigerias buhari secures china deals but currency woes linger

 



Arab Today, arab today
Arab Today, arab today Hats, scarves add beauty to women

GMT 19:10 2017 Friday ,17 February

Hats, scarves add beauty to women
Arab Today, arab today Tourist guide reveals methods of tourist attractions

GMT 17:46 2017 Saturday ,18 February

Tourist guide reveals methods of tourist attractions
Arab Today, arab today To release new antiques collection

GMT 20:33 2017 Friday ,17 February

To release new antiques collection
Arab Today, arab today Air raid kills eight women, child

GMT 06:42 2017 Friday ,17 February

Air raid kills eight women, child
Arab Today, arab today Murder of 2 reporters in Dominican Republic

GMT 22:45 2017 Thursday ,16 February

Murder of 2 reporters in Dominican Republic

GMT 07:21 2017 Sunday ,19 February

Kenya, Egypt resolve to boost bilateral trade

GMT 05:42 2017 Sunday ,19 February

British consumers battered by Brexit inflation

GMT 05:19 2017 Sunday ,19 February

Russia is ready to act on strong ruble

GMT 05:13 2017 Sunday ,19 February

Iran discovers shale reserves

GMT 16:23 2017 Saturday ,18 February

Indonesia releases seized shipments of citrus
View News in Arabic - Business: اقتصاد دولي
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Kidogo provides childcare for underserved

GMT 20:24 2017 Wednesday ,15 February

Kidogo provides childcare for underserved
Arab Today, arab today Tragic fluctuations of Bakhtiari's life revealed

GMT 06:50 2017 Wednesday ,15 February

Tragic fluctuations of Bakhtiari's life revealed
Arab Today, arab today London to tax old cars

GMT 14:06 2017 Friday ,17 February

London to tax old cars
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today Competes Sweden and Germans by S90

GMT 22:36 2017 Thursday ,16 February

Competes Sweden and Germans by S90
Arab Today, arab today Porsche reveals new 2018 Panamera

GMT 17:31 2017 Wednesday ,15 February

Porsche reveals new 2018 Panamera
Arab Today, arab today Actress Nadeen Al Rassi views art as her entity

GMT 07:30 2017 Saturday ,18 February

Actress Nadeen Al Rassi views art as her entity
Arab Today, arab today Teach monkeys to recognize themselves in mirror

GMT 20:41 2017 Wednesday ,15 February

Teach monkeys to recognize themselves in mirror

GMT 07:05 2017 Friday ,17 February

Singer Diana Karzon will issue a new album soon

GMT 06:40 2017 Friday ,10 February

MP calls for removing text from Islamic story

GMT 13:16 2017 Tuesday ,14 February

First fashion model with Down syndrome

GMT 10:26 2017 Tuesday ,14 February

Emergency UN meeting in Harare

GMT 14:04 2017 Tuesday ,14 February

"Lagom" new Swedish concept in interior design

GMT 12:07 2017 Thursday ,16 February

Bite-mimicking malaria vaccine

GMT 09:03 2017 Thursday ,16 February

Tour guide praises women’s beaches

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre

GMT 15:16 2017 Sunday ,19 February

Apple to start India operations with iPhone SE

GMT 21:42 2017 Sunday ,12 February

Rania al-Ghazali designs candles of bubbles
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday