CBN Hails China Currency Swap but Warns of Deep Economic Risks

CBN Hails China Currency Swap but Warns of Deep Economic Risks

The Central Bank of Nigeria (CBN) has said the Nigeria-China currency swap deal could change the game for the nation’s struggling trade system. It claims the policy will lower shipping costs, reduce Nigeria’s dependency on the U.S. dollar, and improve the way goods move through Nigerian ports.

The deal was first signed in 2018 and quietly renewed in December 2024. Under the agreement, Nigerian and Chinese businesses can trade using their local currencies—the naira and the yuan—without converting into U.S. dollars.

CBN Governor Mr. Olayemi Cardoso, represented by his special adviser Anthony Ogufere, told a room full of stakeholders at a breakfast meeting in Lagos on Tuesday that the agreement simplifies trade and reduces stress on Nigeria’s foreign exchange reserves.

He explained that allowing trade in naira and yuan would help businesses spend less and operate more efficiently. “This makes Nigerian goods more competitive,” Cardoso said.

But it’s not all smooth sailing. Cardoso acknowledged there are big problems standing in the way. One is Nigeria’s trade imbalance with China. We import way more than we export. Another issue is that many Nigerian businesses still don’t use the yuan. Most are stuck on the dollar, either out of habit or lack of knowledge.

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The CBN says China is now Nigeria’s number one trading partner. As of the end of 2024, China made up 35% of Nigeria’s imports, which totaled $11.58 billion. Cardoso pointed out that Nigeria’s maritime sector could see the biggest benefits from the deal. Ports could clear goods faster. Shipping documents could become simpler. And big projects like the Chinese-funded Lekki Deep Sea Port will help speed up trade.

Still, not everyone in the room shared the same excitement.

Mr. Martins Olajide from the Nigeria-China Strategic Partnership called the deal helpful but temporary. He said it’s more of a patch than a cure. Nigeria’s deeper problems—like heavy imports, weak production, and falling naira value—aren’t going away just because we switch currencies.

“Swapisation can only go so far,” Olajide said. “If we don’t produce more and fix our industries, we’re just swapping dependence on the U.S. with dependence on China.”

He argued that unless Nigeria builds stronger factories, adds value to raw materials, and invests in industrial power, the yuan swap might backfire. It could make Nigeria even more tied to China economically.

At the same meeting, Chairman of the Customs Consultative Council (CCC), Aare Akeem Olarenwaju, gave a blunt warning. He said Nigeria’s unpredictable exchange rate is killing businesses and crushing ordinary people.

“You can’t set the price of goods even for a day,” Olarenwaju said. “This morning the dollar is ₦1,600, by afternoon it could hit ₦1,700. Tomorrow, maybe ₦1,500. It’s the poor who pay the price.”

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He urged Nigerians to explore alternative currencies like the Chinese yuan to escape the constant dollar drama. He said this could help bring some stability back into the system.

Olarenwaju praised the Maritime Reporters’ Association of Nigeria (MARAN) for setting up the conversation. He encouraged journalists to help spread the word and get people thinking outside the dollar box.

Earlier, MARAN President Mr. Godfrey Bivbere welcomed guests with a call for balance. He said while the China currency swap might cut costs and help with trade, Nigeria must tread carefully.

“We’re not here to clap for every policy,” Bivbere said. “We’re here to ask hard questions. Yes, there’s progress. But there are also risks.”

He urged maritime workers, businesspeople, and financial experts to approach the China deal with their eyes wide open. Bivbere stressed that only strong, home-grown policies can truly help Nigeria escape its economic trap.

The underlying message from the meeting was clear: the Nigeria-China currency swap has potential, but it’s not a silver bullet. It might help in the short term, but unless Nigeria fixes its deeper economic problems, the benefits won’t last.

The country still needs better infrastructure, stronger industries, and more exports. Otherwise, swapping currencies will just shift our foreign dependency from one hand to another.

And in today’s global economy, that’s a dangerous gamble.