Britain’s Export Finance Agency
has announced plan to add the Naira to its list of “pre-approved currencies”.
This will allow the agency
provide financing for transactions with Nigerian businesses denominated in the
local currency.
According to Reuters, the Naira
will become one of three West African currencies that UK Export Finance has
pre-approved for its programme of funding transactions that promote trade with
Britain.
“This is a clear indication of
how much value the UK places on its relationship with Nigeria”, British High
Commissioner to Nigeria, Paul Arkwright said in a statement by the UK credit
agency.
“It will provide a firm
foundation for a significant increase in trade and investment between both
countries”.
The statement said the UK would
provide up to 85 per cent of funding for projects containing a minimum of 20
per cent British content.
“The Naira financing will follow
the same structure as someone buying in sterling, except that Nigerian firms
taking out a loan in local currency can benefit from a UK government-backed
guarantee.
“This can enable businesses to
manage foreign exchange risks and, many times, to negotiate better terms with
local banks,” it added.
Bismark Rewane, head of
Lagos-based consultancy Financial Derivatives expressed confidence that the
financing deal with the UK would help local importers buy British goods.
“If I buy a Rover, the British
government is now guaranteeing that I can pay in naira, so the foreign exchange
risk has been shifted from me to the Nigerian government,” Rewane said.
“If the Central Bank of Nigeria
is unable to remit funds to the UK, then the liability will be on Nigeria.”
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