Business
As Africa, China trade gains momentum, the Yuan may replace the Dollar as the preferred currency of trade
“As in most African countries, the main currency used by firms in foreign trade is still the US dollar, it is natural that such innovative mechanisms meet resistance from some companies and institutions that are used to working under that system. The role of governments is to try and anticipate important changes, to make business see the benefits brought by cross-border yuan settlement.”
The cross-border yuan settlement extends beyond Africa – countries, such as Australia, Japan, Turkey, the United Arab Emirates and BRICS members, have all signed agreements with China to use their own currencies to trade, and this could inspire African governments to learn from those deals and review their own arrangements.
It will be necessary for rising African economies to understand more about the function of the currency swap agreement, with upcoming shifts driven by China’s industrial and investment activities, it will assist their companies to accelerate the use of the yuan as a trade settlement currency, and help ease the heavy dependence on the US dollar and build a fair trading environment between China and Africa.
Source: China Daily – Africa
