The Central Bank of Nigeria (CBN) wishes to announce the
execution of a bilateral currency swap agreement with the
Peoples Bank of China (PBoC). The Governor of the CBN,
Mr. Godwin Emefiele, led CBN officials while PBoC Governor,
Dr. Yi Gang, led the Chinese team at the official signing
ceremony in Beijing, China, on Friday, April 27 2018, a
culmination of over two years of painstaking negotiations by
both Central Banks.
The transaction, which is valued at Renminbi (RMB) 16 billion,
or the equivalent of about $2.5bn, is aimed at providing
adequate local currency liquidity to Nigerian and Chinese
industrialists and other businesses thereby reducing the
difficulties encountered in the search for third currencies.
Among other benefits, this agreement will provide Naira liquidity
to Chinese businesses and provide RMB liquidity to Nigerian
businesses respectively, thereby improving the speed,
convenience and volume of transactions between the two
countries. It will also assist both countries in their foreign
exchange reserves management, enhance financial stability and
promote broader economic cooperation between the two
countries.
With the operationalisation of this agreement, it will be easier
for most Nigerian manufacturers, especially small and medium
enterprises (SMEs) and cottage industries in manufacturing and
export businesses to import raw materials, spare-parts and
simple machinery to undertake their businesses by taking
advantage of available RMB liquidity from Nigerian banks without
being exposed to the difficulties of seeking other scarce foreign
currencies.
The deal, which is purely an exchange of currencies, will also
make it easier for Chinese manufacturers seeking to buy raw
materials from Nigeria to obtain enough Naira from banks in
China to pay for their imports from Nigeria. Indeed, the deal will
protect Nigerian business people from the harsh effects of third
currency fluctuations.
With this, Nigeria becomes the third African country to have such
an agreement in place with the PBoC.
Both the Nigerian and Chinese officials expressed delight at the
conclusion and signing of the agreement and expressed the hope
that it would boost mutually beneficial business transactions
between Nigeria and the Peoples Republic of China.
Isaac Okorafor
Ag. Director, Corporate Communications
