Charles Okocha Explains the Naira-Yuan Swap Deal: Money for the Boys

Manasseh Egedegbe
May 18, 2018 · 5 min read

The light in the club was dim. I sat in one corner, admiring the dancers as they floated across the dance floor to the tune of Davido’s Assurance. Such rhythm and grace.

I was startled from my admiration by a commotion at the entrance. Straining my neck to see what was going on, I heard a loud husky voice shouting, “I deserve some accolades mehn! Gimme some accolades!! I deserve more accolades!!!”

Charles Okocha ran into the room in his usual boisterous manner in a sparkling white singlet, with his red t-shirt dangling down has back pocket and a bottle of Hennessy in his right hand. He went straight to the dance floor, and grabbed one of the dancers by the waist as the room erupted into laughter. After about half a minute, he suddenly saw me and left the dancer, and rushed towards me shouting, “Dockay!! Dockay!!”

Most of my friends call me Doctor, but Charles in his wisdom decided that Dockay sounded better than Doctor.

“How far now, Dockay?” he asked, as we shared a fist bump.

“I dey my brother. Wetin dey happen na?”

“That thing dey work oh, that thing dey work. Money for the boys, scatter everywhere.”

“Ehen. Tell me more.” I prodded.

“That swap deal wey Naija do with China na better thing oh. Uche don dey make money like say na yahoo.”


Nigeria signed a swap deal for the sum of $2.36 billion with China. This means that China will provide the sum of 15.03 billion Yuan to Nigeria, at an exchange rate of 6.37 Yuan per US$, in exchange for 719.80 billion Naira, at an exchange rate of 305 Naira per US$.


Charles, placed his bottle of Hennessy on the table, removed the t-shirt from his back pocket and wiped his brow as he settled on the chair beside me. “Make I yarn you Dockay. First of all, Uche my brother don’t need to pay double transaction fees to exchange Naira for Yuan anymore. Ah! That stress of changing Naira to Dollar and then Dollar to Yuan to pay for electronics in Zhengzhou is not there again. It’s direct exchange from Naira to Yuan now, straight. We worwai now, worldwide niccur. Worwai!”

“Okay,” I responded. “So, how far with thing na?”

“Which thing Dockay?”

“That thing na. See as you dey form as if you no know wetin I dey talk. If I break bottle for your he…”

“Hey, Dockay!!” He shouted again with a boisterous laugh. “You no dey forget something? Ah ah! Na everything you must remember? Haba!”

“You know say my generation like money. Tell me, how far?”

“That thing dey work like magic eh! You know as China and Nigeria don complete the swap, the effective rate on the swap is N47.88…”

Charles is a very smart person, trust me. I will now allow him to explain how his brother is making money in his own words.

“The effective exchange rate is N47.88 per Yuan. You know, since China provided the Yuan at 6.37/$ and Nigeria provided the Naira at 305/$. So to get the cross exchange rate between Naira and Yuan, you simply divide 305 by 6.37.

Now, the interesting thing is that the parallel market rate for US$ is still N360. So there is an arbitrage opportunity for Uche to capitalize here, but he said that thing is hard. He had to use back-channels, but you know in Nigeria, anything is possible. So he was able to strike a deal with an insider to purchase the Yuan at N50.27. The guy insisted on putting a 5% markup on the Yuan.

So, Uche borrowed N50.27 million from me to buy 1 million Yuan from that our insider. He now went to another dealer to sell the Yuan for US Dollar at the market rate of 6.43 Yuan/US$. You know there is a markup of 1% on the offer rate. He got $155,521.00, which he now took to the parallel market to sell at 360 Naira/US$. Guess how much he got? N56 million!! He completed these transactions within three days, mehn! Just three days, my brother made N6 million clean. Just like that! This one sweet pass yahoo mehn!

He was able to make 11% just like that without breaking a sweat. Uche has paid his dues, In full. Nobody can tell me nothing. Amoshine, mehn! Shine! When I was telling you people amoshine, you refused to believe me.”

I was floored. “You mean you and Uche were able to fish out that loophole?”

“Yes o, my brother. We did it mehn. We did it.”

“Are you saying that Uche did not buy the electronics again?”

“Which electronics? There is money on the table and you are talking about electronics. Abeg, let electronics go and rest. Is it not because of the money he was buying and selling electronics before?”


Yes, I know this has gotten a little complicated. This is market in action. Essentially what just happened is that the effective exchange rate at which the swap was done was N47.88 per Yuan. But that was done at CBN official exchange rate of N305/US$. Now the parallel market is quoting N360/US$. By going through that roundabout route, the effective parallel market exchange rate is N56.51 per Yuan.

So what just happened was that Uche was able to take advantage of this spread, and make 11% in three days after all transaction costs including settling the insider. So he spent N50.27 million to buy Yuan close to the CBN effective rate and sold Yuan at the parallel market effective to get N56.51 million.


“But Charles, are you not concerned that once Uche stops selling electronics, he will stop hiring people, and once one person drops out of a competitive market we will be moving towards an oligopoly in which cartels can form and drive up prices of electronics? This is not good for the Nigerian economy.”

“Well fortunately, this is an easier way to make money. We don’t have to face all those customs people stress, and all those multiple taxation problem again. Ah. Doing business in Nigeria is too difficult abeg. I cannot come and go and die. I understand that this may not be too good for the economy, but let’s face it. We are not in business to grow the economy. We are in business to make money. It just happens that our businesses help grow the economy, but when there is an easier route to make this money, only the foolish will close the door on that. It is not my business to block loopholes as a businessman. That is the Government’s business.”

“But don’t you think that as many more people go through this route, they will force down the exchange rate as they sell dollar in favor of Naira?”

‘Hahahaha! Dockay!!! See, on a yearly basis, the amount of goods and services Nigerians import from China is like five times the amount Nigerians sell to China. Let’s see whose swap will finish first…”, with that and his characteristics laugh, Charles waltzed back to the dancing floor and shouted, “Dockay, I will see you at home. Make I dance with Nneka first!!”

My brain started running a few calculations, and then it hit me. The total amount of Naira that CBN gave to PBOC is N719.8 billion, but using two exchange rates means that Nigerians are likely to spend N849.6 billion on purchasing this Yuan. There is a spread of N129.8 billion available for the middlemen, the boys. And guess who these boys are…

I tried to call Godwin immediately to look for a way to block the loophole, but he did not pick. With a heavy sigh, I called my stockbroker, Niyi, who picked at the first ring, “Buy me some Zenith Bank shares…”

Manasseh Egedegbe

Written by

Medical doctor at the cutting edge of Finance 5.0

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