Nigerian central bank governor says yuan becoming reserve currency
According to Xinhua, Nigeria plans to invest 5 percent to 10 percent of its foreign exchange reserves in China’s currency, the renminbi (RMB) or yuan, the country’s central bank governor Lamido Sanusi said on Sept.6.
Nigeria has been discussing with the People’s Bank of China (PBOC), the Chinese central bank, to allow it to invest its reserves in China’s interbank bond market, as well as in the offshore yuan market in Hong Kong, Sanusi said.
“We will continue with our efforts and are close to...taking the RMB as part of Nigeria’s foreign exchange reserve currencies,” Sanusi said at a press briefing in Beijing.
Currently, the Nigerian government has kept its reserves in three major currencies, the U.S. dollar, the sterling and the euro.
“A few years ago, we made a strategic decision to consider adding the renminbi to the basket of reserves,” Sanusi said. Nigeria’s foreign exchange reserves total US$32 billion to US$36 billion with 79 percent currently invested in U.S. dollars, Sanusi said. It’s “inevitable” that the yuan will become an international currency since China is the second largest economy in the world, he said.
The recent downgrade of U.S. debt as well as the debt turmoil in the Europe added to the urgency of diversifying Nigeria’s foreign exchange reserves, he added.
China has a large share of the world trade and is today a major exporter and manufacturer, as well as a major importer of commodities from developing countries, but these are not reflected in the use of its currency internationally, he said.
Over the last 12 months, Sanusi has seen the Chinese currency become more easily convertible and more widely used for trade and investment in the offshore RMB market in Hong Kong.
“A number of countries are participating in the RMB market in Asia and the Latin America, and we are pleased to be the first African country to take the step of joining this group of countries that recognize the importance of China to the world economy,” Sanusi said.
According to him, Nigeria is the second largest economy on the African continent. Its gross domestic product (GDP) has been growing at an average annual rate of 7 percent over the last decade and boasts a population of 150 million.
He said Nigeria is planning a swap arrangement with the PBOC to give Nigerians access to the RMB because of possibilities of settlement of transactions in RMB and of attracting Chinese to invest in Nigeria.
Last year, China’s loans and exports to Nigeria exceeded 7 billion U.S. dollars, while Nigeria exported 1 billion U.S. dollars of crude oil, Sanusi said.
“Today in Nigeria, the RMB is being exchanged on the street for the naira (Nigerian currency) so the market is already ahead of regulator, we are just going to catch up with them officially getting involved in the transactions,” he explained.
China targets Rwanda infrastructure projects
Rwanda has become the latest beneficiary of China’s foray into East Africa as the Asian giant seeks to control the region’s economic landscape, also targeted by Japan and India, according to The East Africa.
China last week gave Rwanda US$15.7 million to boost trade between the two countries. Rwanda will receive half the amount as a grant and the remaining 50 million yuan as a fiveyear interest free loan, said Gao Hucheng, Chinese Deputy Commerce Minister and international trade representative.
Chinese firms are increasingly making strategic entries into Kigali, targeting mainly infrastructure projects. China will send an expert group to Rwanda for a feasibility study of a 25km road construction project in the capital city of Kigali, financed by the Chinese government.
Chinese engineers are also expected to construct a new ultra-modern clinic in Masaka, a suburb of Kigali.
Kigali for its part is sending a delegation to China, led by Prime Minister Bernard Makuza as it seeks to attract investment from the world’s second largest economy.
A July 2011 International Monetary Fund report on Rwanda shows foreign direct investments decline from$118.7 million in 2009 to US$42.3 million last year.
RDB is targeting at least US$500 million in new investments both local and foreign in 2011. “In the past, we have been promoting Rwanda in a more general way, but now, we are not only targeting certain companies, but also targeting projects,” Mr Gara said.
While Asian investment is steadily rising in the country with the RDB registering 20 companies from the region within a period of six months this year with an estimated value of US$16.5 million, Chinese investment is still relatively low compared with India. Between January and July this year, Indian investments were estimated at US$9.2 million, mainly in agroprocessing, manufacturing and administrative and support service sectors, while Chinese projects amounted to US$5 million, mainly in tourism, construction and manufacturing sectors.
“The figures for Chinese FDI are not yet as high as we would want them to be, but certainly we are beginning to see interest,” Mr Gara observed.
Chinese ambassador to Rwanda Shu Zhan said while the country has registered tremendous progress in improving its business environment, including setting up a One-Stop Centre for registration, the “paperwork” is just one aspect of the whole investment environment needed to attract investment.
“The regional situation, especially the uncertain stability of the Great Lakes Region, also affects on the confidence of investors. Rwanda still has room to improve the investment environment, for example, by offering tax breaks,” he said.
Trade between the two countries doubled to US$76.4 million in the first half of this year compared with the same period last year.
“There are various areas of interest such as telecoms, mining and engineering. More than 100 such entrepreneurs have already visited Rwanda to get a better understanding of the environment,” he said.
Nigerian envoy wants Nigeria-China trade imbalance addressed
According to The Nation, Nigeria’s Ambassador to China Aminu Wali said on Sept. 2 that Nigeria would have to increase its exports to China as the trade balance was in the ratio of 7:1 in favour of the Asian country.
“Chinese exports to Nigeria stood at seven billion dollars in 2010, while Nigeria exported goods worth a little less than one billion dollars to China during the period.”
Wali, who spoke with a group of Nigerian journalists in Beijing, noted that Chinese businessmen and government were anxious to buy goods from Nigeria.
“Some Nigerian businessmen had approached us for information on doing business in China and we always encouraged them to look more in the areas of solid minerals and agricultural produce.
“Nigeria is currently China’s second biggest trading partner in Africa- after south Africa- but we can be number one in two to three years.
“Though China is making inroads in the Nigerian oil sector, I am more concerned with the solid minerals and agricultural produce.”
Wali observed that China had been able to remove 300 million of its citizens from living below the poverty level in the last 30 years, adding that Nigeria could adapt the Asian country’s model.
News Agency of Nigeria (NAN) reports that China still has 150 million of its 1.3 billion population living below poverty level, but that indications on ground show that they would soon be prosperous.
“There are Chinese that are still poor but they have the basic necessities of life including electricity, pipe borne water and food on their table,” Wali said.
On the influx of inferior goods into Nigeria from China, he said that dubious Nigerian businessmen were largely to blame.
Ten firms bid for Sh5bn road project
According to Business Daily, ten international contractors are bidding to rebuild the Timboroa-Eldoret road at a cost of Sh5 billion, the only remaining section of Kenya’s main trunk road that is yet to be improved.
The section is part of the Northern Transport Corridor, the main transit route to the landlocked Uganda, Rwanda, Burundi, eastern Democratic Republic of Congo and South Sudan.
When the bids were opened on Friday, most of the bidders turned out to be builders from China who have in recent years dominated the multi-billion shilling road contruction projects in Kenya.
They are Zhongmei Ltd, China Road and Bridge Construction, SinoHydro Corporation Limited, China Henan International, China Railway Seven Group and China Wu Yi Limited.
They will be up against SBI International , H Young Company Ltd , Austrian firm Strabag International and PLL Intex JV. The award would be announced before end of the year.
“We will pick the best evaluated bid by December. We will take three years to complete the project,” said the Kenya National Highways Agency chief executive officer, Mr Michael Kidenda. The agency is responsible for maintenance of highways.
The project will be financed by the African Development Bank (AfDB) amid fears that continued weakening of the shilling could push up the cost of materials by almost a billion shillings.
AfDB has committed US$53.4-million (about Sh4.97 billion) for the project.
The project involves repair of the 73km road to a bituminous standard (Asphalt Hot Mix) road passing through Timboroa, Nabkoi, Kondoo, Burnt Forest, Cheptiret and Eldoret.
Guinea, China Approach Billion Dollar Mining Deal
The new leaders of Guinea are making multi-billion dollar moves that will hopefully help in the country’s reform after decades of unrest. the mineral rich nation is ready to sign a US$5.8 billion million deal with the state-owned China Power Investment, according to Reuters.
The deal will give the China Power Investment digging rights outside of the capital, Conakry. In exchange the investment company will finance a coal power plant, a deep water port and a refinery. currently Guinea has only one refinery to produce its large reserve of bauxite, the principle ore in aluminum.
Guinea’s rulers have long attempted to bring infrastructure to the country of about 10 million people. although the country produces half of the world’s bauxite and is rich in other minerals such as iron and gold, its people are among West Africa’s poorest nations.
Upon its independence from France in 1958, Guinea was crippled by severe instability as it underwent a series of corrupt and violent dictatorships. Alpha Conde became the country’s first democratically elected president last year after an intense run-off with political rival Cellou Diallo. however an assassination attempt last July revealed the country’s continued unrest.
As Guinea finds its footing in the international business world, it looks first to improving its infrastructure, and China has provided an answer to the problems. China’s increased interest in Africa has led to several deals in Guinea alone.