China backs Nigeria’s financial ambitions with currency swap expansion, Panda bond support

China has reaffirmed its commitment to deepening financial ties with Nigeria, endorsing the country’s request to increase its currency swap line and supporting plans for Nigeria to issue Panda bonds.

The move signals a new chapter in the growing economic partnership between the two nations.

This announcement was made by Chinese Foreign Affairs Minister Wang Yi on Thursday, following a meeting with Nigerian President Bola Tinubu at the Presidential Villa in Abuja.

Wang Yi emphasized that these initiatives would not only strengthen Nigeria’s financial stability but also enhance the safety and depth of bilateral cooperation.

“The currency swap agreement reflects the progress we have made in our financial collaboration. Regarding Nigeria’s request to increase the currency swap line, we will positively consider it,” Wang Yi remarked. “Our cooperation is expanding in many areas, particularly in finance.”

The currency swap, first established in 2018, allows for trade between China and Nigeria using their respective currencies, the Chinese yuan and Nigerian naira. If the expansion is approved, it is expected to alleviate liquidity issues in both countries and stimulate increased trade.

In addition to the currency swap, China expressed support for Nigeria’s ambitious plan to issue Panda bonds—renminbi-denominated bonds offered by non-Chinese entities in China’s domestic market.

“We have full confidence in Nigeria’s credibility,” Wang Yi stated, adding that the issuance of Panda bonds would help Nigeria generate revenue while ensuring financial safety through strong support from China.

Furthermore, Wang Yi highlighted China’s ongoing investment in Nigeria’s infrastructure, particularly in the railway sector. “Just recently, Chinese banks provided funding for the completion of phase three of Nigeria’s railway modernization project,” he revealed.

This funding, primarily from the China Development Bank, supports the development of critical infrastructure such as the Kano-Kaduna railway, a key part of Nigeria’s broader efforts to improve transportation and drive economic growth.

Panda bonds present a strategic opportunity for Nigeria to tap into China’s vast pool of investors, potentially addressing Nigeria’s budget deficits and financing crucial infrastructure projects that are essential for long-term growth.

The Federal Government on its part stated that in a bid to strengthen its military capabilities, the Nigerian government has announced plans to collaborate with China on localizing the production of military equipment.

This move aims to reduce reliance on foreign suppliers and avoid delays in acquiring essential defense resources.

During an official visit to Nigeria, China’s Foreign Minister, Wang Yi, expressed optimism over Nigeria’s intent to issue panda bonds in China, leveraging the currency swap arrangement between the two nations.

This development was revealed at a joint press briefing held at the Presidential Villa in Abuja, where Nigeria’s Foreign Minister, Ambassador Yusuf Tuggar, and Wang Yi addressed the media.

Tackling concerns of foreign influence, Tuggar emphasized that private military companies, regardless of their origin, are not the answer to Nigeria’s security challenges, underscoring the nation’s commitment to finding sustainable and sovereign solutions to its security needs.

According to him, “Nigeria has consistently proved effective in leading other countries in our region, and I would even say, on the continent at large, in addressing challenges to peace and security.

“And we do this whenever we partner with other countries and have their support, including major powers that are outside of our region, outside of Africa, and we appreciate that sort of approach.

“And this is why we work well with countries like China. Where we have a problem is whenever Nigeria is left out of such arrangements, it becomes more challenging.

“And it’s not just a one-off thing. It’s not a fluke. It is because of Nigeria’s place and position on the continent and in our region. And that’s why we take a firm stand and say, let us work together towards solving our problems by ourselves.
“Let us shun this idea of allowing others to come in to solve our problems for us.
“So private military companies, as far as we are concerned, it doesn’t matter whether they’re from north, south, east, west; we don’t think it is going to provide the panacea.
“But when you work with us, then we’re able to lead others in solving the problem.

“And also, we want to work with countries like China in domesticating production of military equipment, both kinetic and non-kinetic.
“This is what we’re looking for. So that we don’t have to go out looking to procure because of the delays and so many rules and regulations. We need to be able to produce locally.
“Nigeria is a very responsible country working with the Constitution. And we’ve never had any expansionist tendencies, which is why others reposed so much confidence in us and in our leadership.
“We will continue to work with countries such as China in addressing these challenges and rely on countries such as China, also, to work with us towards ensuring that private military country companies outside interference remains outside.”