Nigeria and Sierra Leone negotiate Currency Swap

The Chairman, Economic Community of West African States (ECOWAS) Committee of Governors of Central Banks, Prof. Kelfala Kallon, has disclosed a plan for currency swap between Nigeria and Sierra Leone.

Kallon, who is the current Governor, Bank of Sierra Leone, decried the increasing dollarisation of West African economies and subsequent depreciation of national currencies in the region.

The Central Bank of Nigeria (CBN), and Peoples Bank of China (PBoC), had earlier in 2018, agreed on a currency swap worth $2.5 billion to reduce their reliance on the U.S. dollar in bilateral trade.

The agreement is aimed at providing sufficient local currency liquidity for Nigerian and Chinese industrialists and other businesses and to reduce difficulties as they search for a third currency.

The deal, purely an exchange of currencies, also will make it easier for Chinese manufacturers seeking to buy raw materials from Nigeria to obtain naira, the Nigerian currency, from Chinese banks to pay for their imports.

In a report by the Nigerian Investment Promotion Commission (NIPC), Kallon said Sierra Leone decided to go ahead with the swap policy with Nigeria as its leading economic partner.

The report indicates that the policy is still under planning and consultations between the two are in progress, noting that the Sierra Leonean financial sector is dominated by Nigerian banks and institutions; as such the policy will benefit both countries by removing the dollar as a factor in their trade relations.
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In his words, "We are engaged in deep discussions with my brother, Godwin Emefiele, and we are forming up the plan, and we will take the plan further.

"Since Nigeria already has a currency swap arrangement with China, Sierra Leone will key into that arrangement. Sierra Leonean import from China can now be done with Naira; this is why we are really interested in the immediate swap deal between Nigeria and Freetown."

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