The Nigerian Presidency has described recent developments in foreign exchange as proof that President Bola Tinubu’s reforms are working. This comes after reports that some Chinese traders in Nigeria have started accepting payments in naira instead of demanding U.S. dollars.
Why the Shift?
According to Nairametrics, forex traders link the trend to Nigeria’s currency swap agreement with China and the growing use of peer-to-peer (P2P) currency exchanges. P2P platforms allow individuals to trade currencies directly without relying on banks or other middlemen, reducing pressure on the naira.
Nigeria-China Currency Swap
Nigeria first signed a three-year swap deal with China in April 2018 to ease dollar shortages and strengthen bilateral trade. The agreement allowed the Central Bank of Nigeria (CBN) and the People’s Bank of China (PBoC) to exchange up to $2.5 billion worth of naira and yuan, giving businesses in both countries access to each other’s currencies.
In December 2024, the Federal Government renewed the deal, reportedly worth $2 billion, to further encourage trade without over-reliance on the U.S. dollar. China remains Nigeria’s largest trading partner, with imports from China reaching N14.14 trillion in 2024, compared to exports worth just over N3 trillion.
Mixed Reactions From Forex Traders
While some forex operators welcome the new acceptance of naira by Chinese traders, others believe the swap deal’s impact is still limited.
Aminu Gwadebe, President of the Association of Bureau De Change Operators of Nigeria (ABCON), said:
“The Chinese are now collecting naira for yuan, doing P2P… There is a lot of liquidity in the market. With the yuan swap, Nigerian businesses don’t really need dollars anymore.”
However, he admitted the original agreement had “expired” and called it “already a failure,” though renewal efforts are ongoing.
Another trader, Yusuf, added that the swap’s real-world impact is minimal since many businesses and individuals still prefer the U.S. dollar. He noted that while yuan is useful for China-related trade, it is not widely available in the Nigerian market or useful for everyday needs like school fees, medical bills, and remittances abroad.
Presidency Credits Tinubu’s Reforms
Reacting to the development, President Tinubu’s Special Adviser on Information and Strategy, Bayo Onanuga, praised the shift as a sign of confidence in the naira.
Onanuga wrote on X (formerly Twitter):
“This is a salutary development for the Nigerian economy. The Tinubu reforms are making foreigners have faith in the naira. The Almighty U.S. dollar is not the ultimate king here. The naira is waxing stronger as an international means of exchange.”
He added that even on Chinese e-commerce platforms, naira cards are now accepted, describing it as proof that Tinubu’s policies are yielding results.
