Nigeria, China Sign Deal to Reduce Dollar Dependence, Embrace Digital Currency
- Nigeria and China are exploring a digital currency exchange to reduce reliance on the dollar for transactions
- The new deal would allow Nigeria to directly convert naira to the Chinese Yuan via the renminbi development by China’s apex bank
- The renminbi (RMB) is a central bank digital currency issued by the People’s Bank of China to allow dependence on cryptos
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The Nigeria-China Strategic Partnership has disclosed that Nigeria would soon ink a deal on Digital RMB with China to allow a direct conversion of naira to Chinese Yuan.
The digital renminbi (RMB) is a central bank digital currency issued by the Chinese apex bank, the People’s Bank of China.
Source: Getty Images
Nigeria, China explore digital currency options
The Director-General of the NCSP, Joseph Tegbe, disclosed that the deal was expected to reduce Nigeria’s dependence on the US dollar.
He described the deal as a significant step in Nigeria’s move from a trade relationship with China to a mutually-beneficial collaboration.
He stated that Nigeria has secured over $30 billion in investment pledges and 300 expressions of interest from Chinese companies in the last five months.
Nigeria-China currency swap deal
The Central Bank of Nigeria (CBN) has highlighted the transformative impact of the Nigeria-China currency swap deal, which aims to streamline trade, reduce shipping costs, and alleviate foreign exchange pressure in Nigeria’s maritime industry.
Signed in 2018 and renewed in December 2024, the agreement allows Nigerian and Chinese businesses to settle transactions directly in naira and renminbi, bypassing the U.S. dollar.
This simplifies trade settlements and reduces the strain on Nigeria's dollar reserves, ultimately lowering business costs and enhancing trade competitiveness.
At a stakeholders’ breakfast meeting, CBN Governor Mr. Olayemi Cardoso, represented by Mr. Anthony Ogufere, noted that China had become Nigeria's largest trading partner by 2024, with a trade volume of $11.58 billion, accounting for 35% of Nigeria’s imports.
The maritime sector, which handles most of Nigeria’s imports and exports, stands to benefit from quicker port clearance and improved trade finance, particularly through Chinese-backed infrastructure like the Lekki Deep Sea Port under the Belt and Road Initiative.
However, the deal faces challenges, such as Nigeria’s trade imbalance with China and limited use of the yuan by Nigerian businesses.
Efforts for greater sensitisation, policy coordination, and expanding non-oil exports to China are needed to fully realise the deal’s potential.
FG to support Nigeria’s digital currency market
According to him, the significance of leveraging Chinese technology, especially in the digital asset ecosystem and knowledge transfer, is enormous, stating that the NCSP is committed to supporting the globalisation of Nigeria’s capital market.
He outlined the objectives of the collaboration, which include infrastructure development, scaling Chinese investments, boosting trade and economic ties, promoting transparency, and advancing cultural exchanges between the two countries.
The Lagos State Governor, Babajide Sanwo-Olu, said the state was developing a policy to monetise idle assets and raise green bonds to fund infrastructure needs.
Sanwo-Olu said Lagos will become the first state in the country to implement the policy. He was represented at the event by the Commissioner for Finance, Abayomi Oluyomi.
Expert explains the benefits of digital currency
Nicholas Okoye, the masterclass convener and a global investment expert, said the digital transformation brought by the fourth industrial revolution has affected all sectors and will open new windows of wealth for investors, institutions, and sub-nationals.
According to Okoye, the most strategic ecosystem transformation is Digital Asset Markets, including investment in cryptos and tokenisation of traditional asset classes.
The new deal to drive digital asset growth in Nigeria
Vanguard reports that Okoye said that the planned adoption of Digital Asset Markets in Nigeria’s capital market and across Africa will be a game-changer for wealth creation and economic growth sustainability.
Additionally, Okoye said, the move will redefine the future of African finance, investment and capital markets.
Source: Twitter
He said the digital assets present an opportunity for Africans to build wealth despite location or profession, provide infrastructure and accurately reflect Nigeria and Africa’s true wealth position.
Experts ask FG to pay corps members with e-Naira
Legit.ng earlier reported that almost four years after its launch, the eNaira is yet to see the anticipated level of adoption, but there may be a way around it.
A blockchain and crypto expert, Solomon Amunde, has recommended that the government speed adoption by using the e-naira to pay members of the National Youth Service Corps (NYSC) the monthly allowance.
According to Amunde, this would become the incentive for the public to adopt the use of the e-naira.
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Source: Legit.ng
