The UK Export Finance Agency has declared that it would soon add Naira to its list of “pre-approved currencies” for trade transactions, a move that would further strengthen the Nigerian national currency against other world currencies.
Reuters reported that Naira would soon become one of three West African currencies that UK Export Finance agency has pre-approved for its programme of funding transactions to promote trade with Britain.
The news outlet however did not speak on the other two national currencies.
The good news is that when added, Nigerians and others in the UK wishing to use the Naira to make payments or provide financing for business transactions denominated in the local currency would be able to do so.
The only exception, the statement said, would be in the area of loans taken in local currency, which must equally be repaid in local currency.
“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.”