China backs Nigeria’s plans for currency swap expansion, panda bonds

China has signaled its willingness to support Nigeria’s request for an expanded currency swap agreement and welcomed the nation’s intention to issue panda bonds in the Chinese financial market.

This announcement was made by Chinese Foreign Minister Wang Yi during his visit to Abuja on Thursday, as part of his four-nation African tour aimed at bolstering China’s influence on the continent.

Speaking at a press conference, Wang Yi emphasized the success of financial cooperation between the two nations.

“As with regard to Nigeria’s wish to increase the line of the currency swap, we will favourably study and consider the issue. Our cooperation is going well in many ways, in terms of finance,” he stated.

The Chinese Foreign Minister also expressed confidence in Nigeria’s economic credibility, affirming China’s support for Nigeria’s plan to issue panda bonds.

“We welcome the panda bonds to be issued. By issuing panda bonds, Nigeria will gain good revenue, and the safety is guaranteed through financial support. We are working to contribute to Nigeria’s infrastructure development, particularly the railway,” he added.

Panda bonds are securities denominated in Chinese Yuan (Renminbi) and issued by foreign entities within China. These bonds provide a means for Nigeria to diversify its funding sources and strengthen financial ties with China.

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Wang Yi’s visit follows recent high-level exchanges, including intergovernmental committee talks in Beijing last June and Nigerian President Bola Tinubu’s state visit to China in September 2024. These engagements have elevated the bilateral relationship to a “comprehensive strategic partnership,” Wang announced.

As part of this partnership, the China Development Bank (CDB) approved a loan of $254.76 million on January 8 for the construction of Nigeria’s Kano-Kaduna railway project.

The project, being executed by China Civil Engineering Construction Corporation (CCECC), is a testament to the growing infrastructure collaboration between the two nations.

In a move to boost trade and investment, China and Nigeria recently renewed their currency swap agreement, valued at 15 billion yuan (approximately $2 billion).

The agreement, valid for three years, is designed to facilitate the use of local currencies in bilateral transactions, reducing reliance on third-party currencies like the US dollar.

A currency swap line allows central banks to exchange currencies to support liquidity and ease trade. This mechanism is expected to streamline financial operations and strengthen economic ties between China and Nigeria.

On the topic of regional peace and security, Wang Yi reiterated China’s commitment to Africa at the United Nations Security Council. “China will always vote in favor of Africa and continue to support Nigeria in rallying countries in the region,” he said.

Wang Yi’s visit to Nigeria comes after a stop in Chad, where he held bilateral talks with Prime Minister Allamaye Halina on Wednesday.

The discussions focused on enhancing mutually beneficial cooperation, following Chadian President Mahamat Idriss Deby’s attendance at the Forum on China-Africa Cooperation (FOCAC) Summit in Beijing last year.

China’s increasing economic engagement with Nigeria reflects its broader strategy of strengthening ties with African nations. With commitments to infrastructure development, financial support, and regional security, the relationship between China and Nigeria appears poised for further growth.

The next phase of discussions is expected to focus on operationalizing the agreements reached and exploring additional areas of collaboration to benefit both nations.