Last month, the Central Bank of Nigeria, CBN signed a currency swap agreement with Peoples Bank of China.

The agreement will allow the two sides to swap a total of 15 billion Chinese yuan, about $2.5 billion dollars, for 720 billion Nigerian naira, or vice versa, within the next three years.

The move is aimed at facilitating bilateral trade, investment and promoting the financial stability of both sides, according to a statement by the PBOC at that time.

The deal can be extended by mutual consent.

So, some people are now asking why Africa’s two biggest economies – Nigeria and South Africa – shouldn’t sign up?

A financial analyst and Managing Director/Chief Executive Officer of Financial Directives Company, Bismark Rewane believes it is high time the two countries consummate such currency deal to boost both their economies.

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Speaking at a breakfast meeting organised by Nigeria-South Africa Chamber of Commerce in Lagos on Thursday, Rewane gave reasons why there should be naira-rand swap deal.

“Nigeria and south Africa are the largest economies in Africa. They account for 37% of Africa’s Gross Domestic Product, GDP. They are major exporters, as 59.9% of all exports in Africa come from Nigeria and South Africa.

“More so, 15.82% of total imports within the continent are by Nigeria and South Africa. So, we have a lot in common. So, any type of deal between Nigeria and South Africa will be useful. It could only consolidate their positions in the continent,” Rewane said.

Speaking further, he said: “Both of these countries have yet to sign the African continental free trade agreement. But collaboration between them will enhance infrastructural development, boost trade, increase external reserves and boost job creation.”

“A currency deal between the two currency,” he said, “will enhance trade flows by 50% to 4 billion dollars and companies that will participate include retail, telecommunications, power, entertainment sectors”.

He added that this will further boost import from both economies where “import from Nigeria currently stands at 32 billion dollars while import from South Africa stands at about 1 billion dollars”.

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