Nigeria to include yuan in its foreign reserves

Africa’s biggest economy Nigeria agreed Tuesday to include China’s yuan currency in its foreign reserves as Beijing seeks closer ties and greater political and economic heft on the resource-rich continent.

At a signing ceremony in Beijing, Presidents Xi Jinping and MuhammaduBuhari presided over the signing of six agreements. They covered industrial activity, aviation and infrastructure investment cooperation between the world’s second largest economy and Africa’s most populous nation, which has struggled in the face of plunging oil prices and an $11 billion budget deficit this year. The Nigerian central bank and the Industrial and Commercial Bank of China signed an agreement allowing transactions to be conducted in yuan and for the currency to be included in Nigeria’s foreign exchange reserves. “If there is demand from Nigeria, China is ready to further conduct financial cooperation,” Lin Songtian, the foreign ministry’s director-general of African affairs, told reporters after the ceremony. 

Nigeria is the first African country to use China’s currency in its reserves, he said. China has poured investment into the continent as it has sought raw materials to fuel its booming economy. It became Africa’s largest trading partner in 2009. But as its growth slowed, Chinese investment declined, falling more than 40 percent in the first half of 2015 due to reduced demand for commodities such as oil, iron ore and copper. China is Nigeria’s second largest trading partner, Lin said, and its third largest source of investment. No specific agreements concerning Nigeria’s budget woes were announced. But Lin said Nigeria could propose projects to receive funding from a $60 billion package China announced at the Johannesburg summit of African leaders attended by Xi in December.