The President had consistently insisted that he would not devalue the naira against the dollar despite pressure from the International Monetary Fund, IMF and the United States.
With the West insisting that the nation’s currency must be devalued, which has always been part of their conditions for assistance, the East (China) has offered to rejuvenate the nation’s economy by investing in capital projects across the country.
During talks, China and Nigeria agreed to strengthen military and civil service exchanges as part of a larger capacity building engagement.
In line with this, China offered to raise its scholarship awards to Nigerian students from about 100 to 700 annually, while 1,000 other Nigerians would be given vocational and technical training by China annually.
According to the Senior Special Assistant to the President on Media and Publicity, Garba Shehu, the Chinese President, Xi Jinping also offered $15 million agricultural assistance to Nigeria for the establishment of 50 demonstration farms across the country.
The offer was in response to Buhari’s vow to make Nigeria self-sufficient in food production.
During Buhari’s visit to Beijing, the Industrial and Commercial Bank of China Limited, the world’s biggest lender, and the Central Bank of Nigeria signed a Currency swap deal on yuan transactions.
The implication according to the Director-General, African Affairs Department, China’s Foreign Ministry, Lin Songtian, is that “Renminbi (yuan) is free to flow among different banks in Nigeria, and the renminbi has been included in the foreign exchange reserves of Nigeria,”
The Minister of Finance, Mrs. Kemi Adeosun, had said last week that Nigeria was looking at panda bonds or yuan-denominated bonds sold by overseas entities on the mainland, which she noted would be cheaper than the dollar and the Eurobonds.
An economic expert and Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, noted that the currency swap agreement will allow Nigerian banks to issue Letters of Credit in renminbi (yuan) in place of the dollar or euro.
“It will facilitate trade deals between Nigeria and China. The ongoing foreign exchange scarcity has been affecting the amount of Nigeria’s import from China.
“The new deal may ease pressure on the dollar, since demand for yuan/renminbi will start rising,” Chukwu said.
So far, most financial analysts have applauded Buhari for the trade agreement with China; on the other hand, China has also expressed interest in setting up major projects in Nigeria such as refineries, power plants, mining companies, textile manufacturing, and food processing industries as soon as the enabling environment is provided by the Federal Government.
Economic pundits have likened this agreement to his 1984 military regime policy when he directed the Apex Bank to cause a change in the colours of the Nigerian currency.
The exercise was designed to render the money alleged to have been stolen by Nigerian political leaders useless in their hands.
In a bid not to devalue, Buhari according to experts is seeking for a way to weaken the dollar dominated currency by approving Yaun to be one of the nation’s major foreign exchange currencies.