The Central Bank of Nigeria (CBN) says it is developing a new framework to promote the use of national currencies in bilateral trade settlements, as part of efforts to reduce reliance on the U.S. dollar.
Speaking at a press briefing during the IMF/World Bank Annual Meetings in Washington D.C., CBN Governor Olayemi Cardoso disclosed that earlier attempts at using local currencies in trade deals had failed to achieve expected results.
“We have had an experiment with that (using national currencies in trade). To be frank, it did not work out very well for us. But we are now at an elementary stage of developing a new framework—one that ensures mutual benefits and a win-win outcome,” Cardoso said.
The CBN governor explained that the new initiative would be more structured and data-driven, building on lessons from previous efforts such as the 2018 Nigeria-China currency swap deal.
That earlier agreement, valued at ₦720 billion (15 billion yuan), aimed to ease pressure on Nigeria’s dollar reserves and support trade between both nations but struggled due to poor awareness and weak implementation.
A renewed three-year swap deal, worth ₦3.28 trillion (15 billion yuan or $2.09 billion), was signed in December 2024 between the CBN and the People’s Bank of China to simplify naira-yuan transactions and reduce dollar dependency.
Cardoso noted that Nigeria’s recent foreign exchange reforms have made the naira more competitive, adding that the country is now recording a trade surplus of about six per cent of GDP—its first in years.
“We now have a more competitive currency and a positive balance of trade. The economy has been restructured to build resilience and create buffers against external shocks,” he added.
Cardoso, who also serves as First Vice-Chair of the G24, said developing nations were gaining stronger representation in global financial discussions under the IMF and World Bank platforms.
He emphasised that sound macroeconomic policies remain crucial to achieving sustainable growth and taming inflation, pointing to Nigeria’s policy reforms as examples of early and decisive action.
Key Points:
- CBN developing a new framework for local currency trade settlements.
- Previous Nigeria-China swap deal (₦720bn) had limited success.
- New ₦3.28tn deal renewed in 2024 to strengthen yuan-naira trade.
- Nigeria records a 6% GDP trade surplus for the first time in years.
- CBN cites improved investor confidence and currency stability.
