RMB increasingly popular in African trade settlement

Want China Times, Staff Reporter 2013-11-20

Renminbi. (Photo/CFP)

The renminbi is gaining popularity in Africa as more countries on the continent have begun in recent years to accept the currency in bilateral trade with China.

The People's Daily said the Bank of China recently wired 5 million yuan (US$820,000) to Mauritius amid great demand for the currency on the island nation.

Meanwhile, citing a business newspaper report in Kenya, People's Daily said the East African country is planning to build a renminbi settlement center. If successful, it would be the first of its kind in Africa.

According to data from the Society for Worldwide International Financial Telecommunications, as of January this year the number of African countries that have accepted the renminbi in their trade with China has increased from five in 2010 to 18 currently.

Although the volume of trade settled in the Chinese currency accounted for just 0.5% of total China-Africa trade in 2012, it is expected to surge to 10%, a predicted US$38.5 billion, by 2015.

The Standard Bank of South Africa said it has launched renminbi services in 16 African countries, including South Africa, Nigeria and Angola.

Standard Chartered Bank has also noticed the increasing popularity of the currency in Africa. China-Africa trade amounted to approximately US$200 billion in 2012, which laid a solid foundation for the renminbi to become a major currency on the continent, the bank stated.

Meanwhile, South Africa's central bank announced on Nov. 12 that it will purchase US$1.5 billion of Chinese bonds, about 3% of its reserved assets. It will be the second African country to buy renminbi bonds as part of its foreign reserve investments, following Nigeria, which did so in 2011.

The Industrial and Commercial Bank of China's representative in Africa, Liu Yagan, told People's Daily that the renminbi's function is manifest not only in trade but also in loans. As Beijing continues to expand its economic growth, Africa can share in the Chinese industrial chain through the growing loan function of the yuan, Liu said.