An investigation by Shipping Position Daily has revealed that despite Nigeria’s strategic efforts to deepen trade with China through the Naira-Yuan swap deal, the United States dollar remains the dominant currency in Nigeria-China trade transactions.
The Naira-Yuan currency swap deal, which commenced in May 2018, is now in its seventh year, yet dollar-denominated transactions continue to dominate, highlighting Nigeria’s persistent reliance on the greenback despite the swap arrangement aimed at reducing this dependence.
Recent data from the National Bureau of Statistics (NBS) shows that China is Nigeria’s largest trading partner, yet dollar-denominated transactions continue to dominate, highlighting Nigeria’s persistent reliance on the greenback despite the Naira-Yuan swap arrangement.
According to the NBS Foreign Trade in Goods Statistics report for the first quarter of 2025, China maintained its position as Nigeria’s largest import partner, with imports valued at ₦15.43 trillion, accounting for 42.82 percent of Nigeria’s total trade in goods. Meanwhile, Nigeria’s exports to China remain relatively low, contributing to a trade surplus of ₦5.17 trillion for the quarter.
Further international trade data show that in May 2025 alone, China exported goods worth approximately $2.24 billion to Nigeria, a 50.9 percent increase from the previous year, while Nigeria’s exports to China were significantly lower at about $252 million, reflecting a continued trade imbalance that favours Chinese exports.
Key Chinese exports to Nigeria, including electrical and electronic equipment, machinery, vehicles, plastics, and steel products, are largely invoiced and settled in US dollars, despite the introduction of the Naira-Yuan swap deal aimed at reducing dollar dependence.
Checks by Shipping Position Daily revealed that limited liquidity of the Naira and Yuan for trade purposes, infrastructural constraints, and the dollar’s universal acceptance continue to favour the use of the greenback. The dollar remains the preferred currency for high-value transactions, import financing, and international trade invoicing, particularly in sectors dominated by Chinese manufactured goods.
The Naira-Yuan currency swap deal, introduced to encourage direct trade settlements between Nigeria and China, is yet to significantly displace the dollar’s dominance. The official Nigerian foreign exchange market still sees the dollar trading around ₦1,550 to ₦1,600, with only marginal strengthening of the Naira since the inception of the swap deal.
Speaking to Shipping Position Daily, Vice President of the Association of Nigerian Licensed Customs Agents (ANLCA), Mr. Segun Oduntan, described the situation as a gradual process that cannot be changed overnight. He noted that despite the availability of the Yuan for direct transactions, many Nigerian importers are yet to fully embrace the swap deal.
“You know it has to be a gradual process. It cannot be done overnight. If you are trading with China and you have RMB to pay, why not use it? But our people are not really tapping into the swap deal yet. It is going to be eventual. We don’t need to go through the dollar to buy goods from China,” Oduntan said.
He added that the continued reliance on the dollar is partly political and partly due to market habits. “Because of the almighty America, you know, that is political. The Nigerian government is managing the situation until they fully switch. A lot of transactions have already been done in dollars before now, so they just have to normalise it gradually,” he said.
Using an analogy, Oduntan likened the transition to moving from manual to automatic vehicles, noting that even when a better option is available, many people remain comfortable with the old system out of habit.
Also speaking, Otunba Babatunde Mukaila, former National Secretary of ANLCA, explained that Nigeria’s entrenched trade practices and the long-standing dominance of the dollar make the transition to the Naira-Yuan platform a slow process. He noted that widespread adoption would require time and concerted policy efforts.
Economic analysts have also pointed out that while the Naira-Yuan swap deal is a strategic step towards reducing dollar reliance, the dollar’s deep-rooted role in global trade, particularly in Nigeria-China transactions, will take time to erode. In addition to goods trade, services such as remittances, insurance, and travel-related payments between Nigeria and China continue to be dollar-denominated, further reinforcing the dollar’s dominance.
The NBS report also noted that despite improvements in export earnings and foreign capital inflows, Nigeria’s external sector remains highly vulnerable to exchange rate volatility and global economic uncertainties.
Nigeria’s 2025 budget targets an exchange rate of ₦1,400 per dollar, reflecting government optimism about currency stabilization through economic reforms and improved foreign exchange access. However, the continued dominance of the dollar in Nigeria-China trade signals that the Naira-Yuan swap deal, while promising, still requires significant policy support, expanded market confidence, and deeper operational scale to become an effective alternative.
The investigation shows that despite China’s status as Nigeria’s top trading partner and the existence of a formal currency swap agreement, the dollar remains firmly in place as the principal currency facilitating bilateral trade.
