African lender Ecobank will sign an agreement to join the China Interbank Payments System (CIPS) for Yuan transactions, its Chief Executive said, as banks race to capitalise on growing trade and investment ties between China and Africa.
Demand for direct settlement of local currencies into yuan has been rising across the continent as commerce with China expands and Beijing pushes to internationalise its currency, prompting banks to invest in the necessary payments infrastructure.
“CIPS is an important part of the infrastructure supporting international RMB payments,” Jeremy Awori told Reuters ahead of signing the deal in China on Saturday.
CIPS connects more than 5 000 banks in over 100 countries and territories, Awori said, providing businesses trading with China with more direct settlement options.
“This co-operation really strengthens the link between the Chinese RMB payment infrastructure and our African banking platform and payment infrastructure, which is obviously critical,” he said.
Ecobank, which operates in 34 African countries, is also in talks with Bank of China to jointly offer yuan settlement services and expects to make an announcement soon, Awori said.
The initiative would complement Ecobank’s CIPS participation and other payments partnerships aimed at facilitating trade between Africa and China.
While the dollar remains dominant in global trade and foreign exchange reserves, growing commercial ties with China have encouraged some African governments, companies and banks to increase their use of the Yuan.
South Africa’s Standard Bank, which became the first African lender to connect to CIPS last November, secured authorisation last month with Industrial and Commercial Bank of China to clear Yuan transactions across the continent.
China-Africa trade rose nearly 18% last year, according to Chinese customs data, and Beijing removed tariffs on imports from 53 African nations on May 1.
Rwanda’s Bank of Kigali has become the latest African bank to join CIPS, while Banco de Fomento Angola is also planning to join the platform.
–Reuters–
