The Central Bank of Nigeria (CBN) has announced plans to relaunch a new framework that will enable Nigeria to conduct bilateral trade using national currencies rather than foreign ones like the U.S. dollar.
CBN Governor, Olayemi Cardoso, disclosed this during a media briefing at the ongoing International Monetary Fund (IMF) and World Bank Annual Meetings in Washington D.C. He revealed that although Nigeria had previously experimented with local currency trade arrangements, the initiative did not deliver the expected outcomes.
“We have had an experiment with switching to national currencies in bilateral trade, but to be frank, it did not work out very well for us,” Cardoso said. “However, we are developing a new framework — now that our currency is more competitive — to ensure that future arrangements deliver mutual benefits.”
The apex bank chief explained that the CBN is adopting a more structured and cautious approach this time to guarantee the success of the initiative and reduce Nigeria’s heavy reliance on foreign exchange in cross-border trade.
Bilateral currency trade arrangements allow countries to settle trade transactions directly using their respective national currencies. Nigeria first experimented with this model through a 2018 currency swap agreement with China, valued at about ₦720 billion (RMB 15 billion). The deal was aimed at easing pressure on Nigeria’s dollar reserves and promoting easier access to yuan for importers of Chinese goods.
However, the initiative struggled to gain traction due to challenges such as low awareness among traders, inadequate yuan liquidity, and exchange rate volatility. As a result, many Nigerian importers continued to depend on the U.S. dollar for international transactions.
Despite the setback, Nigeria and China renewed the currency swap arrangement in December 2024. The new deal, valued at ₦3.28 trillion (RMB 15 billion or approximately $2.09 billion), is valid for three years and aims to simplify transactions in naira and yuan while deepening financial cooperation between both countries.
Cardoso noted that ongoing foreign exchange and macroeconomic reforms had strengthened Nigeria’s external position and made the naira more competitive. According to him, the reforms have helped the country record a positive balance of trade for the first time in years, with a surplus estimated at about six percent of the Gross Domestic Product (GDP).
“For once, we have a situation where we have a positive balance of trade,” he said, attributing the progress to structural economic adjustments that have enhanced productivity, improved investor confidence, and reduced import dependence.
Cardoso, who also serves as the First Vice-Chair of the Intergovernmental Group of Twenty-Four (G24), added that developing nations are now playing a stronger role in global financial discussions under the Bretton Woods institutions — the IMF and the World Bank.
He stressed that maintaining sound and consistent macroeconomic policies remains key to achieving sustainable growth, reducing inflation, and strengthening the resilience of emerging economies.
“The countries that have implemented sound macroeconomic policies are recording better progress in growth and disinflation,” he said, reaffirming that Nigeria’s ongoing reforms would continue to build economic stability and global investor trust.
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CBN to Relaunch Local Currency Trade Framework After Previous Setback
The Central Bank of Nigeria (CBN) has announced plans to relaunch a new framework that will enable Nigeria to conduct bilateral trade using national
