Sunday, May 13, 2018 01.11PM / News
1. First Bank of Nigeria Plc opened a representative office in Beijing, China - June 2010.
2. Ecobank Transnational Incorporated opened a representative office in Beijing, China – December 2012
3. Access Bank Plc opened a representative office in China. – January 2015
The decision by the Central Bank of Nigeria (CBN) to execute a bilateral currency swap agreement with the Peoples Bank of China (PBoC) was long in coming. The RMB16 billion (approx.. $2.5bn) transaction is essentially aimed at providing adequate local currency liquidity to Nigerian and Chinese industrialists and other businesses with the view of reducing reducing the difficulties encountered in the search for third currencies. In short, the agreement will provide Naira liquidity to Chinese businesses and provide RMB liquidity to Nigerian businesses respectively, thereby improving the speed, convenience and volume of transactions between the two countries.
China is the leading trading partner of Nigeria. Nigeria imports several products from China, including, but not limited to raw materials, industrial machinery and motor vehicle spare parts. On the other hand, Nigerian exports are mainly crude oil. Therefore both in terms of volume, value and direction, the terms of trade are stacked against Nigeria.
The rapid growth in Bilateral trade between Nigeria and China over the last fifteen years is evident in rising trade volumes from $2.8 billion in 2005, to $14.9 billion in 2015; before settling down to $13.8 billion in 2017. According to FDC, by 2015, “Nigeria accounted for 8.3% of the total trade volume between China and Africa, and 42% of the total trade between China and the Economic Community of West African States (ECOWAS). This showed that compared to the other countries above, Nigeria’s trade volume with China alone accounted for 18% of the total trade with Nigeria’s major trading partners”.
China Imports from Nigeria
China Imports from Nigeria was US$907.01 Million during 2016, according to the United Nations COMTRADE database on international trade.
China Imports from Nigeria Annual USD
China Exports to Nigeria was US$9.71 Billion during 2016, according to the United Nations COMTRADE database on international trade.
China Exports to Nigeria Annual USD
Nigerian Banks & Trade Facilitation
Whereas the governments intentions are to encourage local substitutes, promote value-chain linked industries in Nigeria and ultimately deliver growth, improved productivity, increased employment and tax revenues; the tilt towards trade is a commercial reality the economy is confronted with given the current uncompetitive status of Nigerian manufacturing is key goods.
Whilst governments works on both medium and long terms policy and approaches to realising this ERGP goals, the facilitation of trade will continue and some forward looking Nigerian banks have positioned their institutions to deliver on this by opening representative offices in Beijing, capital of the People’s Republic Of China.
The earliest movers were:
· First Bank of Nigeria Plc opened a representative office in Beijing, China - June 2010.
· Ecobank Transnational Incorporated opened a representative office in Beijing, China – December 2012
· Access Bank Plc opened a representative office in China. – January 2015
These banks, through their representative offices, are able to offer a one-stop shop for entities seeking to enter the Nigerian market and vice versa. And some of them have established MoU’s and banking relations with Chinese institutions, beyond necessary correspondent banking relationships and regulatory approvals to cover global banking collaboration.
It is important to learn more about how these new developments will improve the business done by banks and its impact on their bottom line; including the impacts on existing clients (importer’s from china and Nigerian manufacturers) and new businesses.
This will be a subject of a “Days After” report where we hope to provide a ranking of services and benefits of all Nigerian banks involved with Nigeria-China trade financing and facilitation.
For further details, contact firstname.lastname@example.org