China, Nigeria renew $2bn currency-swap deal

China and Nigeria have renewed a 15 billion yuan ($2bn) currency-swap agreement aimed at enhancing trade and investment between the two nations.

The arrangement is expected to bolster financial cooperation and promote the broader use of the yuan and naira in bilateral transactions, according to the People’s Bank of China, as reported Bloomberg and Chinese local media on Friday.

“The agreement is valid for three years and may be renewed upon mutual consent,” the central bank said in a statement.

The renewal of the currency-swap deal is anticipated to deepen economic ties, facilitate cross-border trade, and encourage investment by reducing reliance on third-party currencies such as the US dollar, the bank added.

The currency-swap framework was first established in May 2018, when the Central Bank of Nigeria and the People’s Bank of China signed a deal valued at renminbi (RMB) 16 billion (about $2.5bn).

The agreement was signed by Godwin Emefiele, the suspended CBN governor, and Yi Gang, the former PBoC Governor.

The initial deal was designed to enable industrialists and businesses in both countries to directly access the yuan and naira, reducing the need for third-party currencies such as the US dollar.

“This agreement will provide naira liquidity to Chinese businesses and RMB liquidity to Nigerian businesses respectively, thereby improving the speed, convenience, and volume of transactions between the two countries,” the CBN had said at the time of the signing.

In September, President Bola Tinubu met with President Xi Jinping of China, and both leaders agreed to encourage flexible and diverse regional monetary and financial cooperation, such as local currency swaps, to facilitate trade between the two nations.

The leaders also discussed contributions to global financial stability through currency-swap initiatives.

With trade between Nigeria and China accounting for nearly 30 per cent of Nigeria’s total trade, both countries agreed to enhance international cooperation on financial intelligence, focusing on anti-money laundering and countering the financing of terrorism.