$2.5bn Swap Set To Expand To $10bn For Smoother Trade
… Move Expected To Reduce Demand For U.S. Dollar
Daud Olatunji
The federal government is in advanced talks with China to expand the existing Naira–Yuan currency swap from $2.5 billion to $10 billion, a move aimed at easing pressure on the U.S. dollar, stabilising the naira, and narrowing Nigeria’s $23 billion trade deficit with Beijing.
Joseph Tegbe, Director-General of the Nigeria–China Strategic Partnership, said the expanded swap will allow Nigerian businesses to transact directly in yuan, eliminating the need to convert naira to dollars before trading with China.
“A Nigerian business should be able to pay in naira and receive yuan directly in China. Currently, the dollar acts as an unnecessary middleman, increasing demand for U.S. currency,” he explained.
Tegbe added that for the swap to be effective, Nigeria’s foreign exchange reserves must be at a comfortable level, a goal the Central Bank of Nigeria is pursuing.
The swap, first introduced in 2018, allows the two countries to exchange principal and interest in local currencies, supporting smoother trade and reducing reliance on the dollar.
Trade between Nigeria and China remains heavily skewed in China’s favour, with only $2 billion of the $23 billion trade volume representing Nigerian exports.
To address this, Tegbe said Nigeria is fast-tracking export protocols to take advantage of China’s zero-tariff policy for African countries, covering products such as hides, skins, cashew, crabs, and shrimps.
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