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China and Nigeria have renewed a 15 billion yuan ($2 billion) currency-swap agreement to enhance trade, investment, and financial collaboration between the two nations.
The People’s Bank of China (PBoC) confirmed the renewal in a statement reported by Bloomberg and Chinese media on Friday. “The agreement is valid for three years and may be renewed upon mutual consent,” the central bank stated.
This renewed arrangement is expected to deepen economic ties, facilitate cross-border trade, and reduce reliance on third-party currencies, such as the US dollar. By promoting the use of the yuan and naira in bilateral transactions, the agreement aims to strengthen financial cooperation and streamline trade processes.
The currency-swap framework was initially established in May 2018 when the Central Bank of Nigeria (CBN) and the People’s Bank of China signed an agreement valued at renminbi (RMB) 16 billion (approximately $2.5 billion). The deal was signed by Godwin Emefiele, then CBN governor, and Yi Gang, former PBoC governor.
The original agreement aimed to enable businesses in both countries to access the yuan and naira directly, bypassing the need for intermediary currencies like the US dollar. At the time, the CBN remarked, “This agreement will provide naira liquidity to Chinese businesses and RMB liquidity to Nigerian businesses, improving the speed, convenience, and volume of transactions between the two countries.”
The renewal follows a high-level meeting in September 2024 between Nigerian President Bola Tinubu and Chinese President Xi Jinping. Both leaders committed to fostering flexible regional monetary cooperation, including local currency swaps, to facilitate trade and enhance economic collaboration.
The meeting also underscored their mutual interest in leveraging currency-swap initiatives to promote global financial stability. Additionally, they pledged to enhance cooperation in financial intelligence, focusing on combating money laundering and countering the financing of terrorism.
Trade between Nigeria and China accounts for nearly 30% of Nigeria’s total trade volume, highlighting the strategic importance of this partnership. With the extension of the currency-swap agreement, both nations aim to solidify their economic ties and support growth in bilateral trade and investment.
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