Chinese Traders Accept Naira Over Dollars Signaling Shift In Nigeria-China Trade And Reduced Dollar Dependence

 

 

 

For years, the naira has been battling for stability against a rising tide of dollar dependency. Yet, an unlikely twist is now unfolding, and it is Chinese traders who are giving Nigeria’s currency a new sense of importance. The trend is unfolding quietly but firmly, and according to Aminu Gwadebe, President of the Association of Bureau De Change Operators of Nigeria (ABCON), the yuan has become the currency of choice for Chinese businesses in Nigeria, with the naira following closely behind.

The development did not happen by accident. Back in 2018, the Central Bank of Nigeria (CBN) and the People’s Bank of China (PBoC) launched a currency swap agreement designed to create an alternative pathway for trade between the two countries. Nigeria earmarked about ₦720 billion, while China committed ¥15 billion yuan, then valued at around $2.5 billion. This gave businesses on both sides the opportunity to settle directly in local currencies without relying on the dollar.

Six years later, the policy has not only endured but also expanded. In 2024, the deal was renewed with bigger figures, amounting to ₦3.3 trillion worth of naira, matched against ¥15 billion yuan, approximately $2 billion in today’s terms. This expansion has reshaped the way Nigerian and Chinese traders interact, especially as peer-to-peer exchanges have become more active, cutting out traditional middlemen and creating quicker, cheaper settlement options.

The direct impact on business operations is beginning to show. Importers who previously struggled with dollar scarcity now have an alternative channel to settle transactions. This reduces both the financial burden and the waiting time associated with dollar purchases. As a result, more competitive pricing in the Nigerian market could follow, particularly on goods that flow directly from China, Nigeria’s largest trading partner.

Travelers are also quietly benefiting from this change. Those heading to China for business or tourism no longer face double conversion charges that often erode their budgets. Instead of converting from naira to dollars and then dollars to yuan, they can exchange naira directly into yuan. Reports from Nigerian enclaves in Chinese cities reveal that the naira is already being accepted alongside the yuan and the dollar in select markets, a clear sign of progress for a currency long restricted to local use.

Such developments do not occur in isolation. They are the result of deliberate financial diplomacy and long-term policy direction by the CBN and PBoC. By creating a structured platform for bilateral trade using naira and yuan, both regulators have reduced unnecessary reliance on the dollar. This shift, though gradual, positions the naira as more than a domestic unit of exchange; it signals that Nigeria’s currency is edging toward international relevance.

A ripple effect is also playing out in foreign exchange markets. Each time a transaction is executed in yuan and naira, pressure on dollar demand eases. With less demand chasing limited dollars, the naira has more breathing room to stabilize. While this will not solve every economic challenge overnight, it helps reduce volatility and creates an environment where the naira is more resilient to external shocks.

For ordinary Nigerians, the link between exchange rate policies and everyday living may appear distant, but the connection is real. Prices of essential items such as food, fuel, phones, and clothing are all tied to the strength of the naira in global markets. When businesses can bypass expensive dollar routes and settle directly in yuan, import costs are reduced, and that, in turn, has the potential to reflect in more stable retail prices.

The progress, however, is quiet. Unlike other economic measures that are rolled out with loud announcements, this shift is unfolding gradually and subtly. Traders and businesses are simply adjusting to the new reality, and the market is responding in kind.

Nigeria is not replacing the dollar tomorrow, and the yuan-naira arrangement will not erase decades of dollar dominance in international trade. Yet, the symbolism is powerful. Every yuan-naira trade is a step toward diversifying Nigeria’s external relationships and building a more stable foundation for its currency. Every acceptance of the naira in Chinese markets is a subtle affirmation that the Nigerian currency can hold its own outside its borders.

This is not a story of overnight transformation but one of resilience and steady progress. By making small but consistent moves, Nigeria is carving out space for the naira on the global stage. For a currency often associated with crisis and instability, that is no small achievement.

The naira’s journey toward recognition is far from complete, but its quiet rise through China’s trade corridors offers a glimpse of possibility. Each transaction tells a story of a currency learning to stand taller, a people seeking alternatives, and an economy daring to reduce its overdependence on the dollar.