Six years after the initial agreement to a currency swap deal, China’s central bank, the People’s Bank of China, has renewed its bilateral currency swap agreement with the Central Bank of Nigeria to the tune of N3.28 trillion naira, or 15 billion yuan, an equivalent of $2.09 billion.
According to a statement on the website of China’s central bank, the agreement is valid for three years and can be renewed upon mutual consent. The statement said that the renewal of the currency swap arrangement will strengthen financial cooperation between China and Nigeria, expand the use of the two currencies, and promote and facilitate bilateral trade and investment.
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The currency deal involves providing naira liquidity to Chinese businesses and yuan liquidity to Nigerian businesses in order to reduce both parties’ dependence on the dollar for transactions. The deal was first signed in April 2018 for a period of three years amid dollar shortages in Nigeria.
The new deal will expand the use of naira and yuan in business transactions between both countries, strengthening financial cooperation. As Nigeria’s biggest trading partner, China imports crude oil, petroleum gas, and lead ore, among others, from Nigeria, which in turn imports numerous manufactured goods, including vehicles and electronics, from China.
In 2023, Nigeria imported $11.2 billion worth of goods and services from China and exported goods worth $2.4 billion to the Asian country. The volume of trade between Nigeria and China reached $22.6 billion in 2023, according to Vice President Kashim Shettima.
The Vice President disclosed this in November at the Presidential Villa, Abuja, while receiving a delegation from China led by the Vice Chairman of the Standing Committee of the Chinese National People’s Congress, Mr. Zhang Qingwei. Shettima added that the trade relationship between Nigeria and China is growing by 33 percent every year.
China is arguably Nigeria’s biggest development partner in the world, with some landmark infrastructure in Nigeria credited to partnerships with and funding from China. A recent partnership between both countries is focused on renewable energy, smart city development, and critical infrastructure projects.