October 17, (THEWILL) — The Central Bank of Nigeria (CBN) is preparing to relaunch a long-standing plan to allow bilateral trade in local currencies after earlier attempts failed to yield desired results, Olayemi Cardoso has announced.
Speaking at a press briefing during the IMF/World Bank Annual Meetings in Washington, D.C., Cardoso said the CBN is working on a new, more structured framework to support local currency settlements that would reduce dependence on the U.S. dollar and make trade more efficient.
“We have had an experiment with that (switching to national currencies in bilateral trade). And to be frank, it did not work out very well for us. That is not to say that we are not interested in doing this. We are. And we are really at an elementary stage of putting up a framework, now that our currency is more competitive, to be able to ensure that it is a win-win for everybody”, Cardoso stated.
Bilateral currency settlement agreements allow two countries to transact in their national currencies instead of relying on a third currency (often the U.S. dollar). The goal is to reduce foreign exchange risk, lower transaction costs, and preserve FX reserves.
Nigeria previously entered a currency swap agreement with China (2018), valued at around N720 billion (RMB 15 billion), intended to ease pressure on dollar reserves and facilitate trade in yuan. However, Cardoso acknowledged that the earlier scheme “did not work out very well for us.”
Cardoso emphasised that the renewed effort will be more cautious and structured, aiming to ensure mutual benefits and avoid the pitfalls of earlier attempts. He said the more competitive position of the naira will provide a better foundation for success now than in the past.
The CBN’s push follows broader reforms in the foreign exchange market, including enhanced transparency, clearing of FX backlog, and adoption of electronic matching systems.
If successful, relaunching local-currency trade schemes could reduce Nigeria’s reliance on dollar financing and preserve FX reserves, encourage regional trade by removing currency conversion friction, and lower currency risk for exporters and importers
Still, risks remain. The scheme’s success hinges on currency stability, market confidence, and careful design to avoid asymmetric benefits or speculative arbitrage.
The CBN’s renewed commitment to a local-currency trade framework marks a cautious yet strategic step toward achieving greater monetary independence and regional integration.
While previous attempts stumbled due to operational inefficiencies and currency volatility, the current macroeconomic reforms, including exchange rate unification and tighter monetary discipline, could give the policy a more stable foundation.
If properly executed, the scheme could position Nigeria as a regional trade hub less vulnerable to dollar fluctuations, signalling a gradual but meaningful shift toward sustainable economic sovereignty.
Ogochukwu Onwaeze
