China has announced its support for Nigeria’s request to increase the currency swap line and has backed plans for Nigeria to issue Panda bonds, signalling stronger financial cooperation between the two nations.
Chinese Foreign Affairs Minister Wang Yi disclosed this on Thursday at the Presidential Villa in Abuja after meeting with President Bola Tinubu.
He emphasised that the currency swap agreement and potential bond issuance would bolster Nigeria’s revenue, enhance safety, and deepen bilateral ties.
“The currency swap agreement shows how well we have carried out our financial cooperation and sustained its momentum. Regarding Nigeria’s wish to increase the currency swap line, we will favourably study and consider the issue. Our cooperation is progressing well in many ways, especially in finance,” Wang Yi stated.
The currency swap agreement, initially signed in 2018, facilitates trade between the two nations by allowing transactions to occur directly in Chinese yuan and the Nigerian naira.
This expansion, if approved, is expected to ease liquidity issues and boost trade.
Wang Yi also welcomed Nigeria’s plan to issue Panda bonds, a type of renminbi-denominated bond issued by non-Chinese entities in China’s domestic market.
“We welcome Nigeria to issue Panda bonds in China because we have full confidence in Nigeria’s credibility. By issuing Panda bonds, Nigeria will gain good revenue, and safety is guaranteed through financial support,” Wang Yi remarked.
Additionally, the minister highlighted China’s continued commitment to Nigeria’s infrastructure development, particularly in the railway sector.
“Just a few days ago, Chinese banks supported the financial funding for the building of phase three of the railway modernisation project, which has been delivered. Overall, our cooperation is comprehensive, and we would like to further boost it,” he revealed.
The railway modernisation project, including the Kano-Kaduna railway, has received significant funding from the China Development Bank.
This aligns with Nigeria’s broader efforts to enhance critical infrastructure and drive economic growth.
Panda bonds offer a strategic avenue for Nigeria to tap into China’s vast investor base. Funds raised could address Nigeria’s budget deficits and finance key infrastructure projects.
Credit: insidebusiness
