The Chinese Ambassador to Nigeria, Mr. Cui Jianchun, says the China-Nigeria currency swap deal, aimed at facilitating direct trade using the Chinese Yuan and the Nigerian Naira, will be reinstated under the administration of President Bola Ahmed Tinubu.
In an exclusive interview with media executives at the Chinese Embassy in Abuja, the Chinese envoy said Chinese and Nigerian businessmen face lots of challenges facilitating trade between the two countries. This is because Chinese businesses need to use Yuan to purchase dollars before importing goods from Nigeria, while Nigerians need to use Naira to buy dollars before importing from China, leading to bureaucratic hurdles.
Mr Cui said discussions for both countries to facilitate trade in their local currencies started in 2018 under the administration of President Muhammadu Buhari. He emphasized that the Central Bank of Nigeria (CBN) held 15 billion Chinese Yuan (approximately 2.4 billion US dollars at the time), and the Peoples Bank of China had 720 billion Naira. Initially, the Buhari government was keen on implementing the currency swap; however, a change in plans by the federal government through the CBN halted progress, necessitating a period of waiting.
The Chinese envoy said: “The idea was for Nigerian individuals to buy goods from China in Chinese Yuan, while Chinese buyers could purchase Nigerian products like oil, gas, raw materials, and finished goods using Naira. I am somewhat disappointed that there has not been a clear resolution between the two Central Banks, namely the Central Bank of Nigeria and the People’s Bank of China.
“I believe there is still potential to negotiate and finalize the currency swap deal under the Bola Tinubu administration. Discussions are underway for CBN officials to visit Beijing to advance the currency swap agreement. Money serves not only as a medium for trade and investment settlement but also as the nation’s reserve. With various currencies like US dollars, Euros, Pounds, and Chinese Yuan in circulation, I am optimistic that we can soon conclude the currency swap deal due to China’s significant trade relationship with Nigeria compared to that of the Americans or Europeans,” he added.
Mr. Cui stated that the current CBN governor, Yemi Cardoso believes that a currency swap deal will stabilize the Nigerian economy and the foreign exchange market because the US dollar has been weaponized by the American government.
In May 2018, Nigeria and China signed a Bilateral Currency Swap Agreement (BCSA) to facilitate trade and investment between the two countries in their local currencies. According to the CBN, the deal will provide naira liquidity to Chinese businesses and provide Chinese Yuan liquidity to Nigerian businesses respectively, thereby improving the speed, convenience and volume of trade between both countries.
The currency swap deal which is renewable every three years is expected to reduce the demand for US dollars and stabilize the value of the Nigerian naira.
