Bilateral Agreement | CBN Warns Trade Imbalance Threatening Nigeria-China Currency Swap Deal

The Central Bank of Nigeria (CBN) has expressed serious concerns over the persistent trade imbalance between Nigeria and China, warning that the disparity poses a significant threat to the success and sustainability of the bilateral currency swap agreement between the two nations.

Speaking at a breakfast meeting organized by the Maritime Reporters Association of Nigeria (MARAN) in Lagos, CBN Governor Dr. Olayemi Cardoso, represented by his Special Adviser on Finance and Strategy, Mr. Anthony Ogufere, described the current trade dynamic as heavily skewed in China’s favor and detrimental to Nigeria’s long-term economic interests under the swap arrangement.

“The imbalance in trade flows continues to constrain Nigeria’s ability to fully harness the benefits of the currency swap deal,” Ogufere stated. “While the agreement has eased access to Chinese imports and reduced dependency on the U.S. dollar for trade settlements, Nigeria’s export profile remains largely underwhelming.”

Cardoso noted that Nigeria’s exports to China are predominantly unprocessed raw materials, including crude oil, natural gas, and solid minerals—commodities that lack value addition and do not sufficiently attract yuan-denominated inflows. This, he said, limits the reciprocal trade benefits envisioned in the agreement and widens Nigeria’s trade deficit.

He cited figures from 2023 showing Nigeria’s exports to China at approximately $2.51 billion, compared to imports from China which soared to nearly $20 billion—highlighting a gap that undermines the swap’s intended balance.

Industry experts say the currency swap agreement, initially signed in 2018 and extended in subsequent years, was aimed at promoting bilateral trade, reducing exchange rate volatility, and strengthening financial cooperation between the two countries. However, the CBN warned that without a concerted effort to boost local production and diversify Nigeria’s export base, the agreement may falter.

Cardoso called on stakeholders across the public and private sectors to prioritize policies that promote non-oil exports, industrialization, and improved trade logistics to narrow the gap and unlock the full potential of the agreement.