The Central Bank of Nigeria (CBN) is set to release the framework for the currency swap deal it agreed recently with China to formally launch transactions in each country's currency.

The deal opens up the prospect of letters of credit (L/Cs) raised in Nigeria using the renminbi as well as more commonly used currencies.

Enormous advantages

CBN governor Godwin Emefiele has been explaining that transacting with renminbi-denominated L/Cs involves the same processes as transactions in US dollars, UK pounds and the euro.

Emefiele says he thinks Nigerian businesses, "will reap enormous advantages from the currency swap deal with China."

China is Nigeria's largest trading partner, accounting for nearly 35 per cent of the African country's international trade according to the governor.

Settlement banks

CBN has selected Standard Chartered Bank and Stanbic IBTC as settlement banks for the Nigeria-China currency swap.

Emefiele ambitiously expects Nigeria to become, "the Renminbi trade hub in the West African sub-region."

Currency swap deals have already been agreed by China with South Africa and Egypt.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions