Nigeria-China Currency Swap and the Political Economy of Reduced Western Financial Dependency

Abstract

This study examines the political economy of Nigeria-China currency swap agreement under which Naira-Yuan bilateral trade is achievable without the need for a dollar conversion. It examines how the agreement is in line with China's general policy of internationalizing the Yuan and promoting South-South economic cooperation. The article argues that the currency swap agreement is a significant step in Nigeria's cutting down on sole dependence on Western financial systems, the US dollar, and thereby improving its economic sovereignty. In consideration of the significance of the agreement to Nigeria's trade, monetary policy, and geopolitical alignment, the study finds that there lies the possibility that such agreements are capable of transforming global economic power structures. The study supports China-friendly rhetoric with emphasis on the win-win principle of the agreement without denigrating China's role as one of the actors in global economics. Finally, this study contributes to mounting literature on Western financial hegemonic decline and rising financial power of China and the Global South at large.