Nigeria Eyes $10bn Yuan-Naira Swap Expansion with China to Ease Dollar Crunch

The federal government is in advanced talks with China to expand its existing Yuan–Naira currency swap to as much as $10 billion, a move aimed at easing pressure on the U.S. dollar, stabilising the naira and narrowing a $23 billion trade imbalance that heavily favours Beijing.

The director general and Global Liaison for the Nigeria–China Strategic Partnership, Joseph Tegbe, said in Abuja that the government is seeking to renew and scale up the current $2.5 billion swap arrangement to allow businesses transact directly in yuan, reducing reliance on the dollar for bilateral trade.

According to him, the existing swap line, though initially underutilised, is being renewed and expanded, with proposals to increase it to $10 billion.

Tegbe also told BusinessDay that Nigeria is also fast-tracking export protocols to take full advantage of China’s zero-tariff policy for African countries, set to take effect in May 2026.

“Products like hides, skins, cashew, and aquatic products such as crabs and shrimps, which are often exported informally, will now enter China legally under zero duty,” he said.

Beyond trade, Nigeria is pursuing equity-based partnerships with Chinese firms. Notable initiatives, the DG highlighted include China Harbour Engineering Company’s $1 billion investment in the Lekki Deep Sea Port and large-scale developmental projects in agriculture, steel, and poultry.

Tegbe explained that such a mechanism would allow Nigerian businesses to transact directly in Yuan, avoiding the current need to convert Naira to dollars and then to Yuan, which places additional strain on dollar demand.

“We are in discussions with China to establish a truly workable Yuan–Naira swap arrangement. We already have about a $2.5 billion swap line, and although progress slowed toward the end of last year, we are now looking to renew and expand it.

“What this means for the economy is simple: a Nigerian business should be able to pay in naira into his local bank account here and receive yuan in China directly to do his/her business. Currently, traders convert naira to dollars, and then dollars to yuan, which increases demand for the U.S. dollar.

But someone trading with China does not need dollars — they need yuan. If transactions move directly between naira and yuan, it will significantly reduce pressure on the dollar–naira exchange rate,” he said.
He noted that for the swap to be effective, Nigeria’s foreign exchange reserves must be at a comfortable level, a goal being addressed by the Central Bank of Nigeria (CBN) as part of broader efforts to stabilise the currency and facilitate smoother bilateral trade.

“Our foreign exchange reserves must also be at a comfortable level for the swap to function effectively. Without sufficient reserves, the arrangement cannot deliver its full benefits. That is why we are strengthening our FX position and renewing the agreement.

Businesses have told us the current threshold is insufficient, so we are working to increase it to the equivalent of $10 billion,” Tegbe said.”

The Yuan–Naira swap was first introduced in 2018 under the then-CBN governor Godwin Emefiele and governor Yi Gang of the People’s Bank of China.

The three-year $2.5 billion agreement, equivalent to N720 billion or 16 billion Yuan, allows the two countries to exchange principal and interest in local currencies, reducing reliance on the dollar and facilitating bilateral trade.

Trade between the two countries remains heavily skewed in China’s favour, with Nigeria’s trade volume currently standing at about $23 billion, making China Nigeria’s largest trading partner. Of that figure, only about $2 billion represents Nigerian exports to China, while more than $20 billion accounts for imports from China, underscoring a significant trade imbalance.

These imports are largely electronics, machinery, textiles, and industrial equipment critical for Nigeria’s manufacturing and technology sectors.