UK Export Finance has announced the inclusion of the Nigerian naira in its funding program following President Bola Ahmed Tinubu’s decision to float the local currency.
This decision is expected to open up new avenues for trade between Nigeria and the United Kingdom and increased economic growth and investment opportunities.
According to the report from Britain’s export finance agency, the Naira was added to the country’s list of “pre-approved currencies,” allowing it to provide financing for transactions with Nigerian businesses denominated in the local currency.
The naira now joins a select group of three West African currencies approved by UK Export Finance, demonstrating the agency’s commitment to promoting trade with the region.
“This is a clear indication of how much value the UK places on its relationship with Nigeria,” stated Paul Arkwright, the British High Commissioner to Nigeria, in a statement released by the UK’s credit agency. Arkwright further emphasized that this decision would provide a solid foundation for a significant increase in trade and investment between both nations.
Under the program, the UK will offer funding support for projects containing a minimum of 20 percent British content, contributing up to 85 percent of the required financing. What sets this financing option apart is the provision of a UK government-backed guarantee, ensuring Nigerian firms that opt for loans in their local currency receive enhanced security.
The inclusion of the naira in the funding program has garnered positive responses from analysts, who foresee benefits for the local currency and its impact on Nigeria’s trade landscape.
However, some concerns have been raised regarding potential liabilities for Nigeria as trades mature for settlement, as well as the disbursement rate of funds considering the high double-digit interest rates prevailing in the local market.