CBN replies Falana, says Nigeria’s currency swap deal with China still valid

The Central Bank of Nigeria (CBN) says its bilateral currency swap agreement with China was renewed after the expiration of the deal in 2021.

The apex bank released the details of the 2018 currency swap agreement with Peoples Bank of China (PBoC) in a freedom of information (FOI) request sent by Femi Falana, a human rights lawyer.

BACKGROUND

In May 2018, CBN and PBoC signed a currency swap deal valued at renminbi (RMB) 16 billion (about $2.5 billion).

The swap deal was signed by Godwin Emefiele, the suspended CBN governor, and Yi Gang, the former PBoC governor.

The deal was designed to provide the Chinese and Nigerian currencies directly to industrialists and other businesses from both countries.

“This agreement will provide naira liquidity to Chinese businesses and provide RMB liquidity to Nigerian businesses respectively, thereby improving the speed, convenience, and volume of transactions between the two countries,” CBN had said after the signing of the deal.

In June 2023, Falana sent an FOI request to the CBN to disclose the details of the currency swap agreement.

CBN’S RESPONSE

In a response to Falana’s request, the apex bank said the swap deal, which commenced in July 2018, is renewable every three years, adding that the agreement was renewed after it expired in April 2021.

The CBN disclosed that the sum of 15 billion Chinese yuan renminbi (CNY) was the “amount usable within the year”.

The financial regulator said since the renewal of the deal, nine billion yuan have been “drawn”, six billion yuan utilised, while the sum of three billion yuan is outstanding.

According to the bank, out of the six billion yuan utilised, the sum of 5.10 billion yuan had been repaid, while 2.10 billion yuan had not been utilised.

“The swap commenced in July 2018, expired in April 2021, and was subsequently renewed. The sum of CNY 15.00 billion was the overdraft amount usable within the year,” the apex bank disclosed this in a response dated August 8, 2023.

“Since its renewal, CNY9.00 billion had been drawn, CNY6.00 billion utilized and CNY3.00 billion outstanding, and out of the CNY6.00 billion utilized, the sum of CNY5.10 billion had been repaid, while the sum of CNY2.10 billion had not been utilized, leaving the sum of CNY900.00 million yet to be repaid. Furthermore, the next renewal is expected to take place in 2024.”

FALANA ASKS NIGERIANS TO TRANSACT BUSINESS WITH CHINESE PEOPLE IN NAIRA

Commenting on the development, Falana claimed that despite the currency swap agreement, the federal and state governments, and business community have been “prevented from transacting business in naira and yuan”.

“The swap was also designed to improve the speed, convenience, and volume of transactions between the two countries. But the International Monetary Fund and the World Bank, which superintend the Central Bank of Nigeria, have colluded with the Central Bank of Nigeria to frustrate the currency swap.

“The purpose of the economic sabotage is to promote the dominance of the United States Dollar in Nigeria. Hence, the federal government, state governments, and the business community have been prevented from transacting business in Naira and Yuan. Thus, by compelling Nigerians to pay dollars for goods imported from China, the Central Bank has continued to promote the unwarranted dollarisation of the Nigerian economy.”

The human rights lawyer asked Nigerians to use naira as payment for goods imported from China.