The Chairman, Economic Community of West African States (ECOWAS) Committee of Governors of Central Banks, Prof. Kelfala Kallon, has disclosed a plan for currency swap between Nigeria and Sierra Leone.

Kallon, who is presently the Governor, Bank of Sierra Leone, also decried the increasing dollarisation of West African economies and subsequent depreciation of national currencies in the region.

Recall that the Central Bank of Nigeria (CBN), and Peoples Bank of China (PBoC), had in 2018, agreed on a currency swap worth $2.5 billion to reduce their reliance on the U.S. dollar in bilateral trade.

The agreement is aimed at providing sufficient local currency liquidity for Nigerian and Chinese industrialists and other businesses and to reduce difficulties as they search for a third currency.

The deal, purely an exchange of currencies, also will make it easier for Chinese manufacturers seeking to buy raw materials from Nigeria to obtain naira, the Nigerian currency, from Chinese banks to pay for their imports.

In a report by the Nigerian Investment Promotion Commission (NIPC), obtained by The Guardian in Abuja, Kallon said Sierra Leone decided to go ahead with the swap policy with Nigeria as its leading economic partner.

The report, however, indicates that the policy is still under planning and consultations between the two are in progress, noting that the Sierra Leonean financial sector is dominated by Nigerian banks and institutions; as such the policy will benefit both countries by removing the dollar as a factor in their trade relations.

He said: “We are engaged in deep discussions with my brother, Godwin Emefiele, and we are forming up the plan, and we will take the plan further.

“Since Nigeria already has a currency swap arrangement with China, Sierra Leone will key into that arrangement. Sierra Leonean import from China can now be done with Naira; this is why we are really interested in the immediate swap deal between Nigeria and Freetown.”

Kallon explained how the proposed swap deal will work: “For instance, a Sierra Leonean trader coming to Conakry would go into the parallel foreign exchange market in Sierra Leone to acquire dollars (at a premium, most times) to bring to Conakry to convert into Guinean francs (mostly at a discount) in order to purchase her wares.

“This transaction then increases the demand for dollars in Sierra Leone, and its supply in Guinea. The result would be a depreciation of the Leone against both the dollar and the Guinean franc, and the appreciation of the Guinean franc against both the Leone and the dollar. When the transaction is reversed (with a Guinean trader going to Freetown to purchase rice, for example), the fortunes of the Leone and Guinean franc would be reversed relative to each other and to the dollar.”

He continued: “This artificially-induced depreciation of our currencies then creates an expectation of future depreciations, which promotes speculation-induced hoarding of dollars. Like negative shocks, this adversely impacts macroeconomic stability in the region.

“We can mitigate against these outcomes by holding each other’s currencies as reserves to facilitate intra-ECOWAS trade, under such arrangement, the Sierra Leonean trader coming to Conakry would now have access to Guinean francs before leaving Sierra Leone, thus obviating the need for her to buy dollars at a premium in Freetown.”

He said the Guinean counterpart will now have access to Leones before he leaves for Sierra Leone, stressing, “Consequently, intra-ECOWAS trade would have no significant impact on the exchange rates of both the Leone and the Guinean franc relative to the dollar.”

Source: https://m.guardian.ng/business-services/nigeria-sierra-leone-plan-currency-swap/

Since Nigeria already has a currency swap arrangement with China, Sierra Leone will key into that arrangement. Sierra Leonean import from China can now be done with Naira.

This actually pretty good news for the 5 people that do business in Sierra Leone. The Sierra leoneans are benefiting greatly since they're doing the deal increase imports with china. We should see more trade and reduced strain on foreign reserves since nobody looking for dollars.

This is the best Nigerian News so far this year!!!

this is good for both economies

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American will not like this.

Good

If Nigeria switched over to ECO that means China has to renegotiate currency deal. Maybe they expand the amount since they are biggest trading parter in ECOWAS.

Naija has finally turned to a place of joke.

One must give kudos to this administration.

A lot still needs to be done but the pace gives hope that there is light at the end of the tunnel.

Call Buhari a snail and always note that to every step he made, he left footprints.

Dozie32:
Naija has finally turned to a place of joke.

Can you articulate why you dislike the this deal or are you just ranting?

Good start.

It's still unclear why the dollar has to always come between two african currencies

CotenantNIG:
this is good for both economies

Both economies or only Sierra Leone

Our government want do Sierra Leone serious 419

Everybody is into yahoo yahoo now

kolafolabi:

Both economies or only Sierra Leone

Both countries since it enhances trade as article states. The extra liquidity makes business cheaper to conduct. This one reason China has so many bilateral trade agreements.

MoIbrahim:

It's still unclear why the dollar has to always come between two african currencies

It comes between because it's a stable currency that widely traded and maintains it value. Parties are just trying minimizing currency risk. This currency swap just one method.

Interesting times..

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I don't understand

According to what i understood. Nigeria did a currency swap with China(chinese yuan) to lessen the dependence on the dollar.

With China being a very important trade partner with Nigeria and Nigeria having the yuan from the swap, when both countries trade, the yuan can serve in place of the dollar(because the dollar is the common international currency)

Since Nigeria is an economic giant in West Africa, Sierra Leone wants to swap currencies with Nigeria, like Nigeria did with China to achieve the same purpose like i explained above. That also means when Sierra Leone is also dealing with China, they can also pay in Nairas since the currency swap Nigeria did with China covers it too.

Dats means it's a good development.

Economists in the house, I no try? Or I no still understand am

Then currency swap is the way to go.

okay

Nonybb:
Nigeria is a great nation but was held hostage and championed by the Hausa Fulani illiterate North against the educated south

Cry me a River.

The North is always better than your South East in every aspect.

It really does not make sense how Africans have decided to trade with one another. This is a step in the right direction.

[s]

Nonybb:
Nigeria is a great nation but was held hostage and championed by the Hausa Fulani illiterate North against the educated south

[/s]

It is a new year, start using your thinking faculty more instead of seldomly.

Good move. I hope the government knows what they are doing anyways because of this moves must be to the advantage of Nigeria!!

Dozie32:
Naija has finally turned to a place of joke.

What joke?

BeachLife:

My analysis indicates the south isn't better than the north . How can you explain the mismanagement of funds and the underdevelopment and poverty in the south,especially the oil producing states? Obasanjo and Goodluck Jonathan were from south and they failed . Former governor orji Kalu was recently imprisoned for embezzlement. Former governor Akpabio embezzled,Bayelsa Governor embezzled. You think they would suddenly be angelic as president or independent nations?
The north contributes it's quota through agriculture. Though I still think all states or ethnic nations should have autonomy of their resources.

Nigeria's underdevelopment has nothing to do with America or CIA. Even though America cheats in trade sometimes, Nigeria still has money to develop but just not utilizing it efficiently. America never asked you to build roads without sidewalks,markings,traffic signs ,street lights and drainage. America never asked you not to build housing ,good schools and hospitals ,or have an ID database .
Follow orders and you'll be fine . Japan was bombed & occupied ,yet it's still one of the most developed nations . Difference between Japan and Nigeria is leadership.
Read this . Qaddafi died not because America does not want Libya developed but because he failed to obey simple orders.
https://www.globalresearch.ca/hillary-emails-reveal-nato-killed-gaddafi-to-stop-libyan-creation-of-gold-backed-currency/5594742

Uncle , Gaddafi death was planned by the America and all because he was oppressing them .... Libya would have been the greatest African country as of today if he wasn't killed... Activist trained in US was used against him... IF u notice deeply , Buhari is trying to avert the same faith with the likes of SOWORE and KANU.

BeachLife:

My analysis indicates the south isn't better than the north . How can you explain the mismanagement of funds and the underdevelopment and poverty in the south,especially the oil producing states? Obasanjo and Goodluck Jonathan were from south and they failed . Former governor orji Kalu was recently imprisoned for embezzlement. Former governor Akpabio embezzled,Bayelsa Governor embezzled. You think they would suddenly be angelic as president or independent nations?
The north contributes it's quota through agriculture. Though I still think all states or ethnic nations should have autonomy of their resources.


https://www.globalresearch.ca/hillary-emails-reveal-nato-killed-gaddafi-to-stop-libyan-creation-of-gold-backed-currency/5594742

So General Sanni Abacha was a Southerner? Ibrahim Babangida hailed from the South too, right?

Ganduje, the dollarified Kano Governor is a native of Ondo State, shey? etc...

The North is the Origin of Nigerian struggles, the North is fantastically corrupt with Power in their hands, the North is the reason why Nigeria is still 1,000,000 miles behind great Nations.

Let the Country split up today and see South Nigeria flourishing and competing with top Nations.

AGAIN, THE NORTH IS THE PARASITE KILLING NIGERIA.

make them no swap the one wey a cup of garri will be sold at 200 naira, I'll just pack to my village and become a quack native dentist.