The Chinese currency Renminbi (RMB) is certain to play a vital role in the trade transactions between Nigeria and China as Nigeria's central bank opened trading in RMB since last January and has transformed 500 million U.S. dollars of its foreign reserve into RMB in the past six months, Nigerian bankers told Xinhua in a recent interview.

"Nigeria to the best of my knowledge, probably we are the only one in Africa that has gone ahead to act on that, " said David Adepoju, head of Global Markets of Standard Chartered Bank Nigeria Ltd.

Apart from the benefit of diversification of a foreign reserve portfolio with weakness in U.S. dollars and euros, Nigeria also wants to increase cooperation with China, he said.

"There's always a discomfort on valuation since most Nigerian companies can only raise dollars and they are exposed to a short- term exchange rate risk between the amount of dollars raised at a particular time to the time of payment in the Chinese currency. The RMB has been appreciating more often against the U.S. dollars, so we found situations where a Nigerian importer will be at a short-fall," said Sola Adegbesan, head of Global Markets of Stanbic IBTC Bank.

"The certainty of being able to buy the Chinese currency at inception takes away that discomfort and it also gives certainty to the Chinese exporter because he doesn't have to build up margins for exchange rate fluctuations. So that certainty would also make the business circle a lot faster because there would be no ambiguity concerning payments," he added.

The overall benefit to both countries is that there would be larger turnover of business and it will be much easier to do. This will encourage people to have more interest in the business relationship. For the Chinese economy, the increase in demand for that currency will build wealth for it internally, Sola said.

The trade volume between Nigeria and China surpassed 10 billion U.S. dollars in 2011 and trade transctions in RMB is on the agenda of many Nigerian importers.

Although the policy is in place, it still takes time for the transactions to be traded in RMB in full swing.

"What tends to happen when something is new, it takes sometime for people to catch on. If I spoke to an importer right now he is indifferent between the RMB or US dollar unless he actually sees the cost savings to himself, " said Adepoju from Standard Chartered.

He said that the key change at the end to happen was being able to convince exporters that the bank can pay them in RMB and therefore getting them to change their invoice from dollars to RMB.

"There are some apprehension if its actually possible and you do know that there are quotas in different countries and for different groups on how much RMB you can trade daily. So its not as if it is freely available," he said.

"However, what we're trying to do is to be at the forefront, have those conversations, engage with the central bank and we believe what the central bank has done and intends to do is a step in the right direction and as we increase awareness we do believe that that first transaction is going to come very soon," he said.

Standbic IBTC Bank, which is a member of South Africa's Standard Bank Group, made a step further in the RMB transaction with its strong ties with Industrial and Commercial Bank of China (ICBC). ICBC owns a 20 percent stake of the Standard Bank Group.

"Our customers don't have to make their payments in dollars again if they want to have access to the Chinese currency. The processing is quite simple. It's just for the customer to indicate the currency in which he or she wants the settlement to be done," said Adegbesan.

"If the person wants the settlement done in the Chinese currency, then it's quite simple because we'll be able to provide payment through our offshore branches straight to our customer in China and in the Chinese currency," he said.

Stanbic IBTC Bank has had one or two customers who indicated settlement in Chinese currency and it worked quite well. In other countries, it has even gone beyond settlement. In some countries where there are Stanbic IBTC Bank branches, they can pay a customer in cash if that's what he or she wants, he said.

"Here in Nigeria, we will be paying the Chinese currency in cash. It falls in line with our retail foreign currency strategy and I think by the second quarter of this year, it will be achievable and hopefully before the end of 2012, it will grow wider. Most blue chip companies are beginning to do their importation out of China because the country now has quality products that can compete with the European nations, " said Adegbesan.

To reduce reliance on the greenback, China has exerted enormous efforts to make the yuan more international over the past few years.

It allowed Hong Kong to establish an offshore yuan market and has signed 1.3-trillion-yuan currency swap contracts with 14 countries and regions to allow the currency to circulate outside the mainland.

Meanwhile, the country introduced a yuan trade settlement scheme in July 2009 in a number of regions and expanded it nationwide in 2011.

According to earlier data released by the central bank, China's overall cross-border trade settlement in yuan under the current account hit 2.58 trillion yuan (409 billion U.S. dollars) by the end of 2011 since the scheme was launched.

In terms of RMB going global, Adepoju from Standard Chartered suggest the currency to be freely convertible and there need to be a lot liquidity in the currency.

"Quotas where there is a maximum amount that you can buy in a particular day needs to be removed. So people need to buy RMB at any point in time, in large volumes, in large quantities at the flick of minutes. Those are the steps that needs to be taken before it can be considered really as a global currency," said Adepoju.