Britain reveals plan for Naira

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.”