Let’s have an intelligent conversation here for once.

It’s increasingly becoming a reality that the BRICS and some other countries that share in their view, are pushing for de-dollarisation of global trade which would see the US dollar cease being the fiat currency for trade in the international market.

A lot of people are celebrating this move but haven’t really explained how it would exponentially benefit a country like Nigeria or a continent like Africa for instance.

Let’s take an example, if Nigeria trades in Chinese Yuan for instance, where will it spend the Yuan apart from another trade with China?

If we sell Oil to Kenya and Kenya pays with Kenyan Shillings, where are we going to spend that apart from another trade with Kenya?

For me, I see the dollar like a “lingua franca” in a multi-lingual society.

Take Nigeria for instance, if the different Nigerian tribes refused to learn and communicate in English, how would communication amongst all of have been possible? There would have been confusion.

That’s the way I see the dollar. It helped eliminate confusion in international trade as it became the common currency of trade.

If you eliminate the dollar, what are we gonna do? Start trading with gold like in the olden days or resort to trade by barter?

So, I’m asking this question because I know there economists and people with better understanding of the the financial system on Nairaland so they can help us make sense of the emerging reality.

I want us to have an informed understanding of what is going on so that if we are celebrating, we will be celebrating what we understand and not because some paid PR told us to celebrate the fall of American dominance.

Nlfpmod
Mynd44

You might wanna move to front page let’s have some educative conversation.

.

The simple question is who are your big shot customers to what you export and import?
The USA or the Chinese.

If the Chinese Want yuan as means of trading good go ahead, we import more from China and also export to same country hence it wil make sense.

I don't think this should have any effect on the already stabilized dollar Transactions with any country who wishes to trade with it.


If not that we are wicked in this part of the world. The moment we know we consume more from China I expect a direct yuan to naira trade here in Nigeria.
Imagine you want to purchase something from aliexpress and someone is calculating in dollar. It should be in yuan to naira.

Well WHT do I know economist in the house should say more on it

What it means is that part of our foreign reserve will be in Yuan not only in USD.
For example if Nigeria is trading with Kenya, instead of Nigeria to get paid in USD, we can as well get paid in yuan..

I

The honest truth is that nothing that happens on the global stage is ever truly to the advantage of Africans. We have allowed ourselves to be perpetually on the receiving end, always begging for aid, collecting loans recklessly and romancing poverty.

The Dollar will still maintain it's dominance. The Yuan has a disadvantage when it comes to been the currency choice for trade and foreign reserves because of the twin factors of Capital control and China's penchant for devaluation at will. This is u like the US dollars whose value is left strictly to the forces of demand and supply. In addition to this the US government does not imposed capital controls.

OP, if you notice whenever we have political upheavals like this there is always talk of watering down the dominance of the US dollars In global trade. The reality is that even the Euro which comes second won't be able to overtake the dollar for now, not to talk of the Yuan that is tightly controlled by the Chinese government.

In years to come, this conversation will keep going on. Until, the Chinese government releases it's tight control of the yuan, we will keep seeing the dollar dominate. Even regular Chinese companies prefer to do business in dollars.

Jogs1900:
What it means is that part of our foreign reserve will be in Yuan not only in USD.
For example if Nigeria is trading with Kenya, instead of Nigeria to get paid in USD, we can as well get paid in yuan..

I

That shouldn't be a problem I swear. There is no country in this world who doesn't rely on China. Even USA no matter the social media war with em, they still produce large numbers of their stuffs.

Having yuan in our reserved should not be a thing to debate on.
AGREE On bileteral trading, accept our naira and we accept their yuan. Sell yuan to Nigerians who needs it at a reasonable price.

princemillla:



That shouldn't be a problem I swear. There is no country in this world who doesn't rely on China. Even USA no matter the social media war with em, they still produce large numbers of their stuffs.

Having yuan in our reserved should not be a thing to debate on.
AGREE On bileteral trading, accept our naira and we accept their yuan. Sell yuan to Nigerians who needs it at a reasonable price.

It's not meant to be ..
For instance,If are processing Form M in the bank..Even if your supplier is in China, CBN remits USD to your China supplier because our foreign reserve is in USD.

Now if we now have our foreign reserve in yuan, Naija importers will have the option of paying their suppliers in China yuan because we have it in our reserve.

It's meant to favor our economy at the long run

It is a share waste of time and an attestattion to the fact that the African leaders are unreasonable and seemingly always are taking the carts before the horses. Dollarisation is synonymous to globalization. Reversing the dollar in an economy is a difficult process for underdeveloped countries or developing countries which needs a cocktail of solution that should be attended to before the effect of such process. They should learn from Zimbabwe. Countries that are enmeshed in the huge fiscal deficits, low foreign investment inflows, OPECially controlled economy, economic mismanagement, poor momentary policy and control by the CBN like we witnessed in Nigeria recently, In such a macro and micro economy can’t stand on it’’s own rounded currency. Before any country(ies) singularly or collectively, in Africa can embark on such a policy, they must build fiscal surpluses, lower public debt and external debt(Nigeria already owing about 40B dollars(how do we expunge ourselves from our creditors?Oh De-dollarise and then “yenise”? Reduce inflation. Build our foreign reserve by adopting a contemporary monetary policy and clear a lot of bottlenecks in the policy making systems which all
Look like what Africa isn’t readily available for by looking at how slow we are moving- Nigeria is a case study here!

We must concentrate on production like Peter Obi has always emphasized and decongest our oil sector. Our oil can’t be about 6% of our gdp and yet it is made to look like it is contributing about 90%. We need to deemphasize on oil and key into other critical sectors. If we can have all these done, then we can think about de-dollarisation. Africa can’t have import based economy and then talk about de-dollarisation of a state. It is like putting a cart before the horse as aforementioned.

No need wasting 2 minutes on the conspiracy theory especially from Nigerians who were using naira to buy naira few months ago.


Anyone who believes US dollar will be taken over by any of the BRICS currency in the next 100 years is definitely dreaming.

Britishpea:
It is a share waste of time and an attestattion to the fact that the African leaders are unreasonable and seemingly always are taking the carts before the horses. Dollarisation is synonymous to globalization. Reversing the dollar in an economy is a difficult process for underdeveloped countries or developing countries which needs a cocktail of solution that should be attended to before the effect of such process. They should learn from Zimbabwe. Countries that are enmeshed in the huge fiscal deficits, low foreign investment inflows, OPECially controlled economy, economic mismanagement, poor momentary policy and control by the CBN like we witnessed in Nigeria recently, In such a macro and micro economy can’t stand on it’’s own rounded currency. Before any country(ies) singularly or collectively, in Africa can embark on such a policy, they must build fiscal surpluses, lower public debt and external debt(Nigeria already owing about 40B dollars(how do we expunge ourselves from our creditors?Oh De-dollarise and then “yenise”? Reduce inflation. Build our foreign reserve by adopting a contemporary monetary policy and clear a lot of bottlenecks in the policy making systems which all
Look like what Africa isn’t readily available for by looking at how slow we are moving- Nigeria is a case study here!

We must concentrate on production like Peter Obi has always emphasized and decongest our oil sector. Our oil can’t be about 6% of our gdp and yet it is made to look like it is contributing about 90%. We need to deemphasize on oil and key into other critical sectors. If we can have all these done, then we can think about de-dollarisation. Africa can’t have import based economy and then talk about de-dollarisation of a state. It is like putting a cart before the horse as aforementioned.

Great insight👍.

But isn’t it interesting that you are anti Peter Obi but yet you admit that his idea of increasing production as opposed to the present situation where Nigeria is solely dependent on import, is the most viable solution to Nigeria’s problem?

This simply goes to show that you guys know that Peter Obi was the best candidate in the past election but can’t outgrow your deep-seated primordial sentiments.

MasterJayJay:
No need wasting 2 minutes on the conspiracy theory especially from Nigerians who were using naira to buy naira few months ago.


Anyone who believes US dollar will be taken over by any of the BRICS currency in the next 100 years is definitely dreaming.

You know I want this thread to be purely educative and devoid of our usual political banters, but I can’t help but quip in that most of those who celebrate the supposed incoming ‘downfall’ of America are Muslims. I’m still wondering why it’s so.

Jogs1900:

It's not meant to be ..
For instance,If are processing Form M in the bank..Even if your supplier is in China, CBN remits USD to your China supplier because our foreign reserve is in USD.

Now if we now have our foreign reserve in yuan, Naija importers will have the option of paying their suppliers in China yuan because we have it in our reserve.

It's meant to favor our economy at the long run

I think in the early days of Buhari presidency, he made this media-hyped trip to China where he supposedly signed an agreement with the Chinese government that would enable Nigerian importers to pay for whatever goods they want to import from China in Yuan.

Are you saying that is not happening right now?

Because I remember APC boys taunting Igbos then, that the Jonathan they supported for many years never thought of doing that for them but Buhari that Igbos love to hate has done it.

Are you saying Nigerian importers are not paying for their Chinese imports in Yuan?

rexel99:
The Dollar will still maintain it's dominance. The Yuan has a disadvantage when it comes to been the currency choice for trade and foreign reserves because of the twin factors of Capital control and China's penchant for devaluation at will. This is u like the US dollars whose value is left strictly to the forces of demand and supply. In addition to this the US government does not imposed capital controls.

OP, if you notice whenever we have political upheavals like this there is always talk of watering down the dominance of the US dollars In global trade. The reality is that even the Euro which comes second won't be able to overtake the dollar for now, not to talk of the Yuan that is tightly controlled by the Chinese government.

In years to come, this conversation will keep going on. Until, the Chinese government releases it's tight control of the yuan, we will keep seeing the dollar dominate. Even regular Chinese companies prefer to do business in dollars.

Yeah. I think the volatility of the Chinese currency makes it unattractive to foreign traders to hold reserves of it.

How can you set out to hold 2billion Yuan only for Chinese government to devalue the currency and you see the value of your reserve reduced to about 200million Yuan?

Countries understand that and that’s why China has not succeeded in making her currency a factor in global trade.

What I don’t understand is why some Nigerians are celebrating the fact that some countries are planning to dump the dollar as if it’s such a good news that will put an end to all the problems of the world.

The goal of de-dollarisation is not about bringing the market share of the dollar to its knees. It is about trust.

The reason you keep your reserve in the dollar beside trade is because you trust the American financial system, their impartial policies, their global drive and their justice system. You trust that you can access this funds unhindered at anytime.

What happens when that trust is eroded? When you no longer feel safe that due to disagreements in foreign policies, those who own the dollar can use it as a tool against you and ban their financial services from accessibility to you? It’s a no brainer keeping your reserves in a system you don’t trust! Hence a lot of countries with an ambitious economy or confrontational policies will want to diversify their reserves. Mind you even the most ardent of them all still use the dollars in one form of trade or another.

But diversity/de-dollarisation takes away the ability of the US to weaponize the dollar against it’s perceived enemies, which is a break from its commitments under globalization. It’s not about market shares, the dollar will always be the dominant reserve currency for ages to come, but the ability to use it against its geo political adversaries will diminish.

Whatever has been weaponized will surely get a competitor within the next decade, ranging from insurance, shipping, SWIFT messaging etc.

To answer your question; African neither has an ambitious economic agenda nor a confrontational foreign policy, so de-dollarisation has no major economic benefit for Africa.
Below are the very words of the US treasury secretary;

https://www.wionews.com/world/us-dollar-may-lose-its-dominance-if-nations-are-sanctioned-warns-treasury-secretary-janet-yellen-583125/amp

Penguin2:


I think in the early days of Buhari presidency, he made this media-hyped trip to China where he supposedly signed an agreement with the Chinese government that would enable Nigerian importers to pay for whatever goods they want to import from China in Yuan.

Are you saying that is not happening right now?

Because I remember APC boys taunting Igbos then, that the Jonathan they supported for many years never thought of doing that for them but Buhari that Igbos love to hate has done it.

Are you saying Nigerian importers are not paying for their Chinese imports in Yuan?

Chief, let's remove APC from this discussion before this educational thread is derailed.

This is just similar to the naira swap policy. Though it failed because we have an unfavorable balance of trade with China. What China pays us in yuan is less than what we buy from China .hence the policy failed.
Now, if Nigeria can get some of our crude oil buyers like India, China, and other countries to pay us in yuan and we have enough yuan to build our foreign reserve, then it will be a success for us.

Penguin2:
Let’s have an intelligent conversation here for once.

It’s increasingly becoming a reality that the BRICS and some other countries that share in their view, are pushing for de-dollarisation of global trade which would see the US dollar cease being the fiat currency for trade in the international market.

A lot of people are celebrating this move but haven’t really explained how it would exponentially benefit a country like Nigeria or a continent like Africa for instance.

Let’s take an example, if Nigeria trades in Chinese Yuan for instance, where will it spend the Yuan apart from another trade with China?

If we sell Oil to Kenya and Kenya pays with Kenyan Shillings, where are we going to spend that apart from another trade with Kenya?

For me, I see the dollar like a “lingua franca” in a multi-lingual society.

Take Nigeria for instance, if the different Nigerian tribes refused to learn and communicate in English, how would communication amongst all of have been possible? There would have been confusion.

That’s the way I see the dollar. It helped eliminate confusion in international trade as it became the common currency of trade.

If you eliminate the dollar, what are we gonna do? Start trading with gold like in the olden days or resort to trade by barter?

So, I’m asking this question because I know there economists and people with better understanding of the the financial system on Nairaland so they can help us make sense of the emerging reality.

I want us to have an informed understanding of what is going on so that if we are celebrating, we will be celebrating what we understand and not because some paid PR told us to celebrate the fall of American dominance.

Nlfpmod
Mynd44

You might wanna move to front page let’s have some educative conversation.

You cannot de-dolarise.
We can only have basket of currency in which nations of bed fellow would choose a suitable currency for their international trade and economy.
In as much as there is NATO, Western European nations, Canada, Australia and Taiwan, the BRICS would struggle to back up the BRICS currency due to inequitable distribution of resources among the component nations.
The worst scenario, is a Bipolar World, where if you are not for me, you are against me.
Every nations had gotten the right to choose where to trade.
This is where the US innovation will stand them out.
The ongoing effort by the US and European allies is to render crude oil as an alternate source of energy.
Once this is achieved, believe it or not, most of the allies of Chino-Russia blocks will be rendered impotent.
Most of the innovations and technologies of the US stolen by Chinese would have become obsolete.
The nation that can solve the problems of humanity in the nearest future would rule the World again, and that nation is the US.

The dramatic transformation of China economy was not without the active involvement of the US ,which the Chinese leverage upon, but now deleveraging.
The US was aware of this happening as far back as 1974, they had done countless research on how to cope in today's World.
The solution is in Africa, however the report from Africa was scaring the American away.
In the days of military dominance in almost 95% of Africa countries, the US opted to industrialized China with Petrol-dollar ⛽️.
The result of which lifted over 800 million Chinese out of poverty.
Back to the discussion, we can have a scenario where a country like Nigeria, Ghana and few Africa nations might end up as the potential beneficiary of Chino-Russia vs Euro-American global trade war.

Righteousness2:
The USA didn't become a world power by itself or by its power.
From the History, GOD ALMIGHTY the owner and Creator of the World has always appointed a nation to be a super power.

Egypt was formerly a world super power that ruled other nations, until she became puffed up and God levelled her.
Persia,Babylon , today's Iran with Nebuchadnezzar was a world POWER empowered by God . Until he became full of himself and God brought him low.

What am I saying?
The fall of Nomerica will not affect Africa or Nigeria. God ALMIGHTY runs the show. He raises one and brings down another.
All we need do as a nation is to Ensure we don't follow the evils deeds of Nomerica.
We will be fine.

Nigeria has billions of dollars in foreign reserve. It is myopic to think that fall of dollars won't affect Nigeria.
Secondly, was Egypt currency a global currency?
Lastly, theology won't make you to be a super power. Even God knows that.

Agbados and cassavas boys were celebrating dis moves some days back but there darling owed US billions of dollars mad people.

Jogs1900:

Chief, let's remove APC from this discussion before this educational thread is derailed.

This is just similar to the naira swap policy. Though it failed because we have an unfavorable balance of trade with China. What China pays us in yuan is less than what we buy from China .hence the policy failed.
Now, if Nigeria can get some of our crude oil buyers like India, China, and other countries to pay us in yuan and we have enough yuan to build our foreign reserve, then it will be a success for us.

Lol! Funny how you said we should keep APC out. Lol.

But thanks for actually bringing me up to speed with the current state of that policy.

I’m sure what happened to that policy will still happen to the current noise of BRICS nations when they realize how unsustainable what they are driving at is.

Meanwhile, I’m surprised I can’t seem to find those who have been celebrating the dumping of American dollar coming to this thread to explain why they’ve been celebrating and how it’s beneficial to Nigerian economy.

rayvelez:
Agbados and cassavas boys were celebrating dis moves some days back but there darling owed US billions of dollars mad people.

I’ve been waiting for them to come to this thread and justify that celebration by telling us the benefits of the fall of dollar to the Nigerian economy but they are nowhere to be found.

It’s obvious they have no logical explanation for supporting the fall of dollars except for the sole reason that they think the US is not doing enough to cover the nyash of their drug lord master.

Natajo2021:

You cannot de-dolarise.
We can only have basket of currency in which nations of bed fellow would choose a suitable currency for their international trade and economy.
In as much as there is NATO, Western European nations, Canada, Australia and Taiwan, the BRICS would struggle to back up the BRICS currency due to inequitable distribution of resources among the component nations.
The worst scenario, is a Bipolar World, where if you are not for me, you are against me.
Every nations had gotten the right to choose where to trade.
This is where the US innovation will stand them out.
The ongoing effort by the US and European allies is to render crude oil as an alternate source of energy.
Once this is achieved, believe it or not, most of the allies of Chino-Russia blocks will be rendered impotent.
Most of the innovations and technologies of the US stolen by Chinese would have become obsolete.
The nation that can solve the problems of humanity in the nearest future would rule the World again, and that nation is the US.

The dramatic transformation of China economy was not without the active involvement of the US ,which the Chinese leverage upon, but now deleveraging.
The US was aware of this happening as far back as 1974, they had done countless research on how to cope in today's World.
The solution is in Africa, however the report from Africa was scaring the American away.
In the days of military dominance in almost 95% of Africa countries, the US opted to industrialized China with Petrol-dollar ⛽️.
The result of which lifted over 800 million Chinese out of poverty.
Back to the discussion, we can have a scenario where a country like Nigeria, Ghana and few Africa nations might end up as the potential beneficiary of Chino-Russia vs Euro-American global trade war.

Great insights.

Unfortunately, what drove the Americans away Africa to China in the 70s are still very much prevalent in Africa, if not worst.

The truth is that the Americans built China because of cheap Labour. Now China is turning around to think themselves an elephant big enough to fight with America.

Penguin2:

Lol! Funny how you said we should keep APC out. Lol.

But thanks for actually bringing me up to speed with the current state of that policy.

I’m sure what happened to that policy will still happen to the current noise of BRICS nations when they realize how unsustainable what they are driving at is.

Meanwhile, I’m surprised I can’t seem to find those who have been celebrating the dumping of American dollar coming to this thread to explain why they’ve been celebrating and how it’s beneficial to Nigerian economy.

You've said it all.
I don't think it's sustainable in Nigeria.Our economy is tied to USD .
Nigeria has external loans tired to USD.Companies have loans tied to USD which must be serviced or paid in USD.
Most big economies in the world including China will not de dollarised completely but will only reduce the amount of dollars in their possession .