By Uche Uwaleke
It goes without saying that export- base diversification remains the only sustainable solution to the present Forex crisis.
The current strategy of the government appears to focus on the supply side involving borrowing dollars to improve liquidity in the near term. But it may not record any significant success except the unbridled demand for Forex is dealt with.
To curb the demand pressure, I suggest the government should compel a change in consumption behaviour by enacting a ‘Buy Nigeria law’ akin to the ‘Buy America Act’ of 1933 and recently the ‘Build America, Buy America Act’ of 2021.
Also, Nigeria’s import data support revisiting and scaling up the CBN’s currency swap deal with the Peoples Bank of China.
Given that the bulk of Nigeria’s imports are from China, it stands to reason, therefore, to explore ways of bypassing the dollars and settling these transactions in the Yuan.
This was the idea behind the currency swap with China which was largely inadequate in size.
In order to increase the stock of Yuan in our external reserves, Nigeria can issue panda bonds, which are bonds denominated in the Chinese Yuan and are considered cheaper than Eurobonds
* Uwaleke is Capital Market Professor
