The United Kingdom has declared that the Nigerian naira is now one of the pre-approved currencies for financing transactions.
This online news understand that after Nigeria’s central bank abolished the country’s multiple exchange rate system and effectively floated the naira.
The Export Finance Agency of the United Kingdom (UK) said the new development will make it possible for the country to offer financing for deals with Nigerian companies denominated in local money.
According to the agency, the naira will join the list of three West African currencies that have been given the go-ahead to be used as payment for transactions that advance commerce with Britain.
Meanwhile, some analysts have reacted favorably to the naira’s inclusion in the funding scheme because they see advantages for the local currency and a good impact on Nigeria’s trade environment.
UK cherishes its relationship with Nigeria
Paul Arkwright, British High Commissioner to Nigeria, said the development is an indication of how the UK cherishes its relationship with Nigeria, adding that the decision will solidify ground for increase in investment and trade in both countries.
According to The Nation, Arkwright said that it will lay a solid platform for a sharp rise in commerce and investment between the two nations.
For projects with at least 20% British content, the UK said it will provide funding support under the initiative, contributing up to 85% of the necessary money.
The availability of a UK government-backed guarantee distinguishes this financing alternative, guaranteeing that Nigerian businesses that choose loans in their local currency have improved security.
Analysts hailed the financing option’s effect on the local currency, but they cautioned that it would increase Nigeria’s responsibility when trades mature for settlement. They also questioned the rate at which money would be dispersed given that local interest rates are in the high double digits.