Nigeria, China sign $2.5bn currency swap agreement

Tola Akinmutimi

May 3, 2018

The Central Bank of Nigeria (CBN) has announced the execution of a $2.5 billion bilateral currency swap agreement with the Peoples Bank of China (PBoC) as a strategic monetary measure aimed at boosting local currency liquidity in the two countries’ economies.

A statement by the Acting Director, Corporate Communications Department of the CBN, Isaac Okorafor, showed that the apex bank governor, Godwin Emefiele, led the Nigerian delegation to sign the agreement on behalf of the Nigerian government, while PBoC Governor, Yi Gang, led the Chinese team at a ceremony in Beijing, China.

The deal was sealed following the conclusion of negotiations on Friday, April 27.

CBN’s Acting Director in charge of the Corporate Communications Department (CCD), Isaac Okorafor

Okorafor, stated that the transaction valued at Renminbi (RMB) 16 billion, was to provide adequate local currency liquidity to both countries’ industrialists and also assist other local businesses by reducing the difficulties they encounter in the search for third currencies.

This is even as he stated that the deal would also make Naira available in sufficient value to Chinese businesses and also provide RMB liquidity to their Nigerian counterparts to improve the speed, convenience and volume of transactions between the two countries.

Recall that Deputy Chinese Ambassador to Nigeria, Lin Jing, recently disclosed that the value of bilateral trade between the two countries grew by 30 per cent from 2016 to about $12.3 billion between January and November 2017,

Jing, who described Nigeria as the biggest Chinese investment destination in Africa, also pointed out that the country was also the second largest export market and the third largest trading partner of China in Africa.

It is observed that currency exchange remained one of the challenges many of the Chinese companies handling various infrastructure projects for the Nigerian government have been facing in recent times.

Okorafor stated that the swap deal was expected to assist both countries in their foreign exchange reserves management, enhance financial stability and promote broader economic cooperation between them.