Economy

Nigeria-China currency swap deal: CBN begins Chinese Yuan sales

Written by Maritime First

…As Africa sees 1st carbon-neutral brewery amid climate concerns***

The Central Bank of Nigeria (CBN) on Friday launched the sale of foreign exchange in Chinese Yuan (CNY) signalling the consummation of the Nigeria-China Currency Swap Agreement.

The CBN acting Director,  Corporate Communications, Mr Isaac Okorafor, said that the sale would
be done through a combination of Spot and Short Tenored Forwards.

Okorafor added that the sale would be conducted through a Special Secondary Market Intervention Sales (SMIS) window.

He explained that the window would be dedicated to the payment of Renminbi Denominated Letters of Credit for raw materials, machinery and agriculture.

He said “due to the peculiarity of the exercise, CBN will not be applying the relevant provisions of its Revised Guidelines for the Operation of Inter-Bank Foreign Exchange Market, that is; the guidelines which direct that SMIS bids be submitted to CBN through Forex Primary Dealers.

“The CBN will also not be applying the guidelines which provide that Spot FX sold to any particular end-user shall not exceed 1 per cent of the overall available funds on offer at each SMIS session.”

On the bid period, Okorafor said authorised dealers were requested to submit their customers’ bids from 9 a.m. to 12 p.m. on weekdays.

He said that any bid received after the stipulated time would be disqualified.

On funding, he said that authorised dealers were to debit the customers’ accounts for the Naira equivalent of their bids.

He added that the CBN would debit authorised dealers’ current account on the day of intervention to the tune of the Naira equivalent of their bid request.

Okorafor explained that there would be no predetermined spread on the sale of CNY by authorised dealers to end-users under the Special SMIS-Retail window.

He said that authorised dealers would, however, be allowed to earn 50 kobo on the customers’ bids.

He advised customers who were not willing to accept the settlement terms not to participate in the Special SMIS – Retail.

He added that Forward Bids would be settled through a multiple-price book building process and would cut-off at a marginal rate to be disclosed after the conclusion of the Special SMIS Retail process.

He also urged customers who were not willing to accept the terms of the forward rate not to participate in the Special Chinese Yuan SMIS Intervention.

Okorafor said that the CBN reserved the right not to make a sale if it had the impression that the exercise did not provide effective price for the determination of the CNY to NGN exchange rate.

The Federal Government on April 27, signed a 2.5-billion-dollar Currency Swap Agreement with the People’s Bank of China.

The primary aim is to provide adequate local currency liquidity to Nigerian and Chinese industrialists and also assist both countries in their foreign exchange reserves management.

In the meantime, a South African brewery is said to be the first in Africa to go carbon-neutral as more businesses across the continent adjust to climate change, and as consumers become more careful about the products they buy.

Darling Brewery, in a village near Cape Town, decreased its carbon footprint by using water and energy more efficiently — then brought it to zero in April by purchasing carbon credits at a reforestation project in Zimbabwe.

The brewery’s overhaul comes as South Africa’s Cape region emerges from an extreme drought that saw the city of Cape Town, population 4 million, rationing water and warning of a “Day Zero” when taps would run dry. The crisis has eased amid water conservation efforts.

“I don’t think a lot of people understand what carbon-neutral means or what impact all the businesses around us are having on the environment,” said the brewery’s owner, Kevin Wood. “The damage being done by climate change has a lot to do with our carbon footprint. Just look at the extreme weather here in the Western Cape.”

Greenhouse gas emissions have damaging environmental impacts such as global warming, acid rain and ozone layer damage, according to the sustainability consultant who conducted a greenhouse gas audit on the brewery, Andre Harms.

Darling Brewery was already known for raising environmental issues via the labels on the 17 beers it produces, educating drinkers about Africa’s threatened wildlife.

Now the labels tell drinkers about the brewery’s carbon-neutral status. “They’ll start connecting the dots and change their consumption habits to more environmentally friendly products,” Wood said. He would not say how much it cost to make the brewery carbon-neutral.

Darling Brewery opened in 2010, just as the craft beer sector exploded in South Africa. When the brewery opened there were 30 others and today there are around 215, according to beer journalist Lucy Corne.

She said craft brewery consumers are more likely to be aware of their carbon footprint than regular beer drinkers, as craft beer is a niche product that only South Africa’s middle class and above can afford.

“I think what Darling Brewery has done is really great for the industry,” Corne said, adding that the shift to carbon-neutral could get other breweries thinking about sustainability measures. “They’re leading the way.”

Globally there are only a handful of carbon-neutral breweries, experts say.

Sustainability consultant Franz Rentel confirmed that Darling Brewery is the first carbon-neutral one in Africa. He said he thinks more companies will follow its example.

South Africa will introduce a carbon credit tax by January, which will affect large emitters and is expected to make products from carbon-neutral companies “the cheaper option,” Rentel said.

As more countries put such taxes into place, large breweries could move toward carbon neutrality as well.

Darling Brewery’s brew master, Rene du Toit, said going carbon-neutral is not just about doing the right thing. “A lot of the measures you put in place to reduce your carbon footprint . make economic sense in the long run: You’re paying less for your water, you’re paying less for your energy, you’re putting out less solid waste.”

Sitting at one of Cape Town’s trendy bars, beer lover Nicole McCreedy said choosing to drink a carbon-neutral Darling Brewery beer is about supporting a progressive South African initiative.

“We’ll see far more of (that) globally, I hope,” she said.

Additional report from Fox

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Maritime First