China-Nigeria N3.28trn currency deal renewal to Enhance economic ties
Onome Amuge
Nigeria and China have renewed their bilateral currency swap agreement, reinforcing the growing economic and financial partnership between the two countries.
The Central Bank of Nigeria (CBN) and the People’s Bank of China (PBOC) confirmed the renewal of their bilateral currency swap agreement, amounting to approximately 3.28 trillion Nigerian naira (15 billion yuan or 2.09 billion U.S. dollars).
The renewed agreement showcases the ongoing cooperation between Nigeria and China, as they work towards strengthening financial and economic relations.
According to reports, the bilateral currency swap agreement between both countries has been renewed for a period of three years, with the possibility of further extension subject to the consent of the two central banks.
The development is considered a reflection of the positive impact the agreement has had on both countries since its initial implementation in 2019, as it facilitates smoother and more efficient transactions involving the Nigerian naira and the Chinese yuan.
By continuing this arrangement, both countries aim to expand the use of their respective currencies in international trade, lessening their reliance on third-party currencies like the U.S. dollar and fostering greater economic independence.
A statement released by the People’s Bank of China acknowledged that the renewal of the bilateral currency swap agreement with Nigeria is seen as a major step forward in enhancing bilateral trade and investment between the two countries.
The renewed arrangement is expected to facilitate more seamless access to local currencies for businesses in Nigeria and China, leading to reduced transaction costs and improved efficiency in trade processes. This development is in line with the broader objective of bolstering economic cooperation between the Asian powerhouse and Africa’s most populous country.
Beyond fostering trade and investment, the renewal of the currency swap agreement is a strategic initiative that aims to bolster the internationalization of the Chinese yuan and enhance the stability of the Nigerian naira in global financial markets.
The collaboration is indicative of a broader trend toward exploring alternative methods for trade settlement, which ultimately promotes a more inclusive and diversified global financial system.
Kashim Shettima, the vice-president of Nigeria, recently expressed his satisfaction with the continuous growth of trade volumes between Nigeria and China, which he described as one of the highest trade volumes in Africa.
In light of this, he emphasised the need for a continuous strengthening of relations between the two countries, highlighting that Nigeria and China have maintained a relationship of mutual respect and honour.
Shettima reiterated the importance of the bilateral relationship between the two countries and underscored the need for continued collaboration when he played host to a delegation from China led by Zhang Qingwei, the vice-chairman of the standing committee of the National People’s Congress,recently.
Shettima expressed his contentment with the volume of trade between Nigeria and China, noting that the trade relations between the two countries had grown to $22.6 billion in 2023, an impressive figure that ranked as one of the highest in Africa, if not the highest.
Shettima further commented on the remarkable pace at which the trade relationship was growing, stating that it had been increasing at an impressive rate of 33 percent every year.