Nigeria Offered $6bn Chinese Loan, Agrees Currency Swap To Shore Up Naira

China has offered Nigeria a $6 billion loan to fund infrastructure projects, the Minister of Foreign Affairs, Mr. Geoffrey Onyema, said yesterday in Beijing the Chinese capital.

“It is a credit that is on the table as soon as we identify the projects,” he told reporters travelling with President Muhammadu Buhari to China.

“It won’t need an agreement to be signed; it is just to identify the projects and we access it,” he said.
The confirmation by Onyema coincided with an agreement reached between Nigeria and China yesterday on a currency swap deal, as it looks for ways to shore up the naira and fund a record budget deficit, possibly by issuing yuan-denominated bonds in China, reported Reuters.

Nigeria is facing its worst economic crisis in decades as sinking oil prices eat into its foreign reserves and the naira weakens against other currencies.

Nigeria has been for months looking for sources to help plug a projected 2016 deficit of N2.2 trillion ($11.1 billion) as Buhari plans to triple capital spending in the 2016 fiscal year.

According to Reuters, during Buhari’s visit to Beijing, the Industrial and Commercial Bank of China Ltd (ICBC), the world’s biggest lender, and Nigeria’s central bank signed a deal on yuan transactions.
“It means that the renminbi (yuan) is free to flow among different banks in Nigeria, and the renminbi has been included in the foreign exchange reserves of Nigeria,” Lin Songtian, Director General of the African Affairs Department of China’s foreign ministry, told reporters.

The agreement was reached following a meeting between Buhari and Chinese President Xi Jinping.

Credit: Thisday