Nigeria has reportedly renewed a currency swap deal worth $2 billion with China in a bid to strengthen bilateral trade and investment between both countries.
As reported by Bloomberg, the renewal of the currency swap deal of $2 billion (15 billion yuan) was confirmed by the People’s Bank of China on Friday.
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. However, “the agreement is valid for three years and can be renewed upon mutual consent,” according to the People’s Bank of China as quoted by Bloomberg.
The new deal will expand the use of naira and yuan in business transactions between both countries, strengthening financial cooperation.
Naijaonpoint reported that the volume of trade between Nigeria and China, reached $22.6 billion in 2023, quoting Vice President Kashim Shettima.
The Vice President disclosed this in November at the Presidential Villa, Abuja, while receiving a delegation from China led by 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% 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.
President-elect Donald Trump, who will be inaugurated in January 2025, has threatened to impose trade tariffs on members of the BRICS bloc of Global South nations if they “back any other Currency to replace the mighty U.S. Dollar.”