Chinese Traders Now Accepting Naira

For years, Nigerians have watched the naira lose its strength against the dollar. Every trip to the market, every import deal, and every international payment seemed to revolve around one currency the United States dollar. The scramble for dollars created constant pressure on Nigeria’s foreign exchange market, often sending the naira into a downward spiral. But now, something unusual is happening: Chinese traders are beginning to accept naira directly for business transactions, cutting the dollar out of the equation.

This quiet but significant shift has been linked to Nigeria’s currency swap deal with China, as well as the rising use of peer-to-peer (P2P) trading platforms. And according to traders on the ground, these developments are playing a role in stabilizing the exchange rate, at least for now.

Nigeria first signed a currency swap agreement with China in April 2018. The idea was simple: instead of Nigerians needing dollars to import goods from China, they could pay in naira, while Chinese businesses could settle in yuan. This was supposed to reduce the dependence on the dollar, provide liquidity in both currencies, and make trade smoother between the two countries.

China is not just another trading partner for Nigeria it is the largest. In 2024 alone, Nigeria imported goods and services worth over N14 trillion from China, while exports back to China stood at a little above N3 trillion. With such massive trade volumes, reducing dollar dependence could make a real difference to Nigeria’s foreign reserves and the strength of its currency.

Over the years, the agreement has been renewed, including a $2 billion swap deal signed in December 2024. But what is interesting now is how Chinese businesses in Nigeria are increasingly willing to collect naira directly, bypassing the dollar entirely.

Speaking to Nairametrics, Aminu Gwadebe, the President of the Association of Bureau De Change Operators of Nigeria (ABCON), described the situation bluntly. “The Chinese are now collecting naira for yuan, doing P2P. Go to any mining factory in Nigeria, and you will see a Chinese man transacting in naira. These two things the swap deal and P2P trading  are working right now. There is a lot of liquidity in the market.”

What Gwadebe is saying is that the combined effect of peer-to-peer trading and the naira-yuan swap is helping take some pressure off the dollar. For example, a Nigerian importer buying goods from China no longer needs to desperately hunt for dollars. Instead, they can pay in naira, convert into yuan, and settle directly with their suppliers.

For many traders, this makes sense. Why go through the stress of exchanging naira to dollars and then dollars to yuan when you can skip the middle step entirely? In fact, Gwadebe emphasized that using the dollar as a middle currency no longer makes sense for Nigerian businesspeople who are focused on Chinese markets.

However, not everyone is convinced that this development will solve Nigeria’s forex challenges. Another trader, Yusuf, pointed out that while the swap is useful for those importing from China, its impact on the broader market is limited.

“The idea of the swap was to reduce dependence on the dollar for trade between Nigeria and China,” he explained. “But in reality, many Nigerian traders still prefer the U.S. dollar because it is more widely accepted. Even Chinese suppliers often ask for dollars, not naira or yuan. So, yes, the swap helps, but in the black market and everyday transactions, the effect is very small.”

He added that when it comes to everyday needs like paying school fees abroad, handling medical bills, or sending money to family overseas, the yuan is hardly ever an option. Dollars, pounds, and euros remain the go-to currencies.

One of the reasons the dollar continues to dominate is liquidity. While dollars are readily available on the street market, yuan is not. You can walk into almost any bureau de change or parallel market dealer in Nigeria and buy dollars, but yuan is not nearly as accessible. This makes the swap useful in theory, but challenging in practice.

Still, the fact that some Chinese traders in Nigeria are accepting naira shows a small but meaningful shift. It might not overhaul the system overnight, but it offers a path toward reducing dollar demand in specific areas of trade.

Nigeria’s dollar problem is not going away anytime soon. The country relies heavily on imports, while exports (beyond crude oil) remain relatively low. This creates a constant imbalance: demand for dollars is always higher than supply.

The swap deal with China is one way to reduce that pressure. By allowing direct transactions between naira and yuan, Nigerian businesses can avoid adding unnecessary demand to the dollar market. If the model works and expands, Nigeria could look at similar agreements with other major trading partners.

That said, there are real concerns about whether this strategy can be sustained. Imports from China, though significant, only account for about 20% of Nigeria’s total annual imports. This means that for the remaining 80%, Nigerians will still need dollars, euros, or pounds. Until Nigeria diversifies its trade and export base, the dollar will remain king.

For the average Nigerian, the technical details of a currency swap may seem far removed from daily life. But in reality, exchange rate stability affects everything from the price of imported rice and electronics to tuition fees and medical costs abroad. When the naira weakens, inflation bites harder. When the naira holds steady, families breathe a little easier.

The fact that Chinese businesses are now accepting naira shows that Nigeria has some leverage in shaping its forex destiny. It may not be the ultimate solution, but it is a step in the right direction. And in a country where the value of the naira often feels like it is slipping away day by day, even small wins matter.

For now, Nigerians can take cautious comfort in the relative stability seen in recent months. But the real test will be whether policies like the swap deal can be expanded, sustained, and combined with broader reforms to truly put the naira on firmer ground.