The Central Bank of Nigeria (CBN) is formulating a new framework to facilitate the use of national currencies in bilateral trade, a move aimed at reducing reliance on foreign exchange and enhancing Nigeria’s role in global commerce.
CBN Governor, Olayemi Cardoso, made this known during a press briefing at the IMF/World Bank Annual Meetings in Washington DC. He admitted that earlier efforts to execute trade settlements in local currencies did not achieve the desired outcomes but confirmed that the apex bank is revisiting the initiative under a more structured and strategic approach.
“We have experimented with that before, and frankly, it didn’t work out very well. However, that doesn’t mean our interest has waned. We are indeed revisiting it, and we are currently at the early stage of creating a new framework—especially now that our currency is more competitive—to ensure it delivers mutual benefits,” Cardoso explained.
Bilateral currency settlement frameworks allow two nations to trade using their local currencies instead of relying on the U.S. dollar. Nigeria had previously adopted such an arrangement through a 2018 currency swap deal with China, worth about ₦720 billion (RMB 15 billion).
The agreement was introduced to ease pressure on Nigeria’s foreign reserves and support trade between both countries. Nevertheless, it faced multiple setbacks, including poor awareness among traders, administrative challenges, exchange rate instability, and insufficient yuan liquidity within local banks. As a result, most businesses continued to rely on the dollar for imports despite the initiative.
In December 2024, Nigeria and China renewed the swap agreement, now valued at ₦3.28 trillion (15 billion yuan or $2.09 billion), to last three years with an option for renewal upon mutual agreement. The renewed pact is designed to simplify transactions between the naira and yuan while deepening financial cooperation between both nations.
Cardoso’s statements signal that the CBN is reassessing how to effectively operationalize local currency trade settlements, especially as ongoing foreign exchange reforms have strengthened the competitiveness of the naira.
He highlighted that Nigeria’s macroeconomic adjustments and foreign exchange reforms have started to reinforce its external position, resulting in a positive trade balance for the first time in years.
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“From Nigeria’s standpoint, the challenge is less severe now because we took key corrective steps earlier. Our currency is now more competitive, and consequently, we are recording a trade surplus projected at about six per cent of GDP, expected to remain steady for some time,” Cardoso added.
He described the ongoing shift as part of a broader economic restructuring that has helped bolster resilience and create buffers against external shocks, particularly within the oil sector.
As First Vice-Chair of the G24, Cardoso also underscored the growing participation of developing nations in global financial conversations, especially within institutions such as the IMF and World Bank.
“It has been a very valuable experience. Under Argentina’s leadership as Chair of the G24, we have advanced the influence of emerging economies. We now have a more meaningful presence and a stronger voice at the table,” he stated.
Cardoso noted that recent G24 communiqués reflected the main concerns of member countries, including domestic revenue generation, inflation management, debt sustainability, and economic growth. He emphasised that sound and coherent macroeconomic policies remain fundamental to achieving disinflation and sustainable growth among developing economies.
“The progress witnessed in some nations today is evidently linked to those that embraced prudent macroeconomic policies early on,” he remarked.
The G24—formally known as the Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development—was established in 1971 to coordinate the positions of developing countries on international financial and development matters.
