China’s central bank said on Thursday it has signed a three-year bilateral currency swap agreement with Nigeria worth 15 billion yuan ($2.36 billion).
The People’s Bank of China (PBOC) said on its website the swap deal will facilitate trade and investment, and safeguard stability of financial markets of both countries.
According to the ACCA global: “A currency swap is an agreement in which two parties exchange the principal amount of a loan and the interest in one currency for the principal and interest in another currency. At the inception of the swap, the equivalent principal amounts are exchanged at the spot rate.”
Nigeria is Africa’s most populous nation and has the continent’s biggest economy. It recently slid in recession but made a quick exit. The economy was a major plank of the Buhari campaign that brought him to power in 2015.
China on the other hand is seen as a key economic player across the continent. Its infrastructure investments are sprawling across much of sub-Saharan Africa.
Chinese presence in Africa is also accompanied by a strong diplomatic relationship. African leaders have often flown to Beijing to engage on diplomacy but on the sidelines signed trade and bilateral deals.