China-Africa trade boom pushes yuan adoption across the continent
By Aboki Forex —
Rapid growth in trade between China and Africa is driving wider use of the Chinese yuan. Beijing's decision to remove tariffs on imports from most African countries is expected to speed up this trend.
Chinese customs data show trade between China and Africa rose by nearly 5 percent in the first quarter. Analysts say the tariff removal, which took effect in May, will boost trade volumes further and increase yuan-denominated transactions.
Research shows that countries with stronger trade ties to China tend to use the yuan more. China reinforced this push on Wednesday with new measures aimed at promoting global use of its currency.
Chinese ports are now receiving more African exports. These include Nigerian cattle bone pellets, Kenyan avocado oil and South African apples. The tariff reductions have opened the door for more goods.
As trade flows grow, demand for currency settlements between the yuan and African currencies is also rising. Bankers say new payment platforms and efforts by some countries to diversify debt financing are helping to boost yuan adoption.
Yuan transactions are growing, according to the Chief Executive Officer of Standard Chartered Kenya. But he does not expect the yuan to replace the U.S. dollar anytime soon.