China and Nigeria have extended their 15 billion yuan (approximately $2 billion) currency-swap agreement to further promote trade and investment between the two nations. This agreement aims to strengthen financial collaboration and increase the use of the yuan and naira in transactions between the countries, according to the People’s Bank of China. The arrangement, which is effective for three years with the possibility of renewal, is expected to reduce dependence on third-party currencies like the US dollar and improve cross-border trade and investment flows.

The currency-swap agreement was first established in May 2018, when the Central Bank of Nigeria (CBN) and the People’s Bank of China signed a deal valued at 16 billion RMB (around $2.5 billion). The goal of the original deal was to allow businesses in both countries to access the yuan and naira directly, bypassing the need for intermediary currencies such as the US dollar. At that time, the CBN stated that the agreement would improve transaction efficiency and volumes by providing liquidity in both currencies.

This recent renewal of the agreement follows discussions between Nigerian President Bola Tinubu and Chinese President Xi Jinping in September, where both leaders emphasized the importance of enhancing regional monetary and financial cooperation, including local currency swaps, to foster trade. They also highlighted their commitment to global financial stability through initiatives like currency swaps. With trade between Nigeria and China constituting nearly 30% of Nigeria’s total trade, the agreement will also focus on international collaboration in financial intelligence, particularly in combatting money laundering and terrorism financing.