Following Nigeria’s acute foreign exchange crisis and piling debt, the country has joined seven other developing nations in a strategy move to enhance direct trade and commodity swaps in a desperate bid to overcome prevailing foreign exchange crisis.
The alliance which is now called D8, involving eight developing nations, also seeks to tackle the common problem of acute energy poverty which is stalls speed of economic and social development.
Delegates from both government and private business leaders and officials from Egypt, Iran, Malaysia, Nigeria, Pakistan, Turkey and Bangladesh met in Bangladesh to map out clear pathways to overcome dwindling foreign currency reserves, a growing energy crisis and supply chain disruptions.
The countries and business leaders examined how member nations could cooperate in driving trade and commerce without the challenges of foreign exchange financing. They evaluated possibility of driving trade financing and transactions with alternative options like cross currency swap, barter and blockchain in order to circumvent their foreign currency reserves vulnerabilities.
The Oracle Today reports that Nigeria currently is in deep debt trap, a situation which drains the country’s foreign exchange income and creates international trade financing crisis and associated triggers on inflation.
The Naira has seen a steady loss of strength since the government of President Muhammadu Buhari came to power, plummeting from about N150 for a dollar in 2015 to over N700 for a dollar on Tuesday as the Central Bank of Nigeria (CBN) struggles to manage acute foreign exchange scarcity.
Representatives of D-8 eight countries share similar problems and seek alternative trade financing, Bangladesh’s Foreign Minister, A.K. Abdul Momen, adding that the countries with collective $5 trillion economy are working to implement a free trade agreement while also increasing the volume of trade.
Bangladesh, a nation of 160 million people and the world’s 41st largest economy, has suspended operations in diesel-run power plants to ease pressure on the cost of imports. The country’s central bank has also taken measures to reduce the imports of luxury goods amid shortages of dollars in banks.
“Due to ongoing impact of the COVID-19 pandemic and key global economic developments, every member country is experiencing foreign reserve and currency vulnerabilities, supply chain disruptions, inflation, energy and food security risks, and therefore should take precautionary measures to prepare for business beyond the usual,” said Sheikh Fazle Fahim, president of the D-8 Chamber of Commerce and Industry.
Nigeria and other oil producers in the group went to the meeting with offer for energy swaps. Organizers said the participants were exploring ways to boost energy security with members such as Iran and Nigeria among the world’s top oil producers.
Momen said the group should tap into its young workforce. “We have over 200 million young people, youth. And in addition, we have a lot of women entrepreneurs that are coming up.”
D-8 was established in Istanbul in 1997 to engage in economic cooperation and improve member states’ position in the global economy.
