CBN’s communication strategy for Nigeria-China currency swap

It is remarkable that the Central Bank of Nigeria (CBN) has recognised that it is not just enough for it to sign a currency swap agreement with its counterpart, the Peoples Bank of China.

There are concomitant civic duties that should be pursued, in this connection

Yes, there are more to it especially as the agreement, which was signed earlier this year to facilitate a number of expected benefits to the national economy, imposes enormous burdens on the apex bank that it must discharge creditably, if expectations are to be met.

Some of the basic but important burdens that CBN should necessarily attend to urgently include enlightening and sensitising relevant stakeholders about the swap arrangement, its underlying operational policies, procedures and processes as well as the benefits and risks, if any.

Furthermore, the CBN should also let Nigerians know how foreseeable risks can be prevented from crystalising or how they can be mitigated.

It is essential that these are taken care of, especially as not much, if any public enlightenment and sensitisation were undertaken by the Bank prior to the execution of the agreement.

What is more critical, the implementation guidelines were released after the agreement had been signed.

It is also imperative that CBN must not expect that Nigerians will jump at and rejoice over the new arrangement for the settlement of some specified trade/commercial transactions between Nigeria and China.

Thus, aside from committing resources (especially time and money) to create awareness, the product must be adequately promoted to generate the kind of needed understanding, support and patronage of the target businesses in the country.

And in embarking on such programmes, it is necessary that CBN deliberately identifies and focuses on the existing and potential import and export target businesses.

It is, therefore, in the light of the foregoing that it must not surprise anyone that CBN has commenced hosting town-halls on the currency swap agreement.

According to reports the other day, the apex banking regulator had held such a meeting in Lagos where it brought business organisations together to “woo” them into using the Chinese currency, the Yuan, instead of the American Dollar, to make payments for good/products imported from China.

Similarly, Nigerian businesses exporting goods/products to China would, going forward, receive payments in Naira instead of the American Dollar, as had always been the case.

Consequently, settlement of trade transactions between businesses in Nigeria and China would be in the local currencies of the trading countries.

Thus, the subsisting intermediate currency, the American dollar, both countries have been using for settlements, would be eliminated from the scene.

To businesses in Nigeria, that have, for many years, been used to making and receiving payments in American currency, this new approach to international trade transactions settlement might portend problems.

Thus, there is the very high probability that most of them may lack the confidence and trust in the new arrangement.

They may, therefore, seat on the fence to watch rather than take a plunge into the uncertain waters.

Given this possible scenario, CBN has enormous task in its hands to convince and secure the confidence of the businesses in the new system of payment. It needs to provide sufficient and convincing information to them to facilitate their buy-in to the currency swap arrangement.

So, at such town-halls, which should be extended to all commercial and industrial areas, the organised private sector organisations, market associations and professional institutes as well as relevant government ministries, departments, agents and parastatals, adequate time should be allowed for the participants to ask questions and seek clarifications.

Well-informed unambiguous answers should be provided to ensure proper understanding and building of trust and confidence in the new deal.

When this type of sensitisation has been sufficiently undertaken, and CBN and deposit money banks ensured that accessing use of the product will not be cumbersome and operationally bureaucratic, there may not necessarily be the need to woo businesses to comply with the new trade settlement arrangement between Nigeria and China.

Such will also be the situation if there is no better settlement alternative and the target businesses will prefer to sustain or initiate trading relationships with China.

Problem however, will certainly arise if the above safeguards are neglected and if elements of corruption are introduced in the operations.

In an attempt to quickly score a sizeable patronage of this trade transaction settlement mode, CBN should not be a lone ranger in its promotion strategy.

A broad spectrum of well-informed stakeholders on the subject matter should assist in creating the necessary awareness and enlightenment.

In particular, deposit money banks (DMBs) and other financial institutions involved in handling international trade should be made to support the CBN.

In the circumstances, it is only when the product is adopted and used by importers and exporters that anticipated public and private benefits will accrue therefrom.

Thus, for recognising the need and taking steps to start enlightening and sensitising businesses, through a face-to-face town-hall about the China-Nigeria currency swap and its operational modalities, CBN has proven its seriousness in ensuring success of the programme and so deserves some plaudit.

But, it has to go further to put its house and those of DMBs that will deliver the service in order.

In the main, the CBN should urgently consider using alternative modern communication channels to reach a larger number of Nigerians who may be interested in trading with China, a significant market that can no longer be ignored even in global context.