Business
Kenya looking to host Africa’s first yuan clearing house – to cut need for dollar settlements
(Reuters) – Kenya wants to host a clearing house for China’s yuan currency – a bold African first that would deepen the continent’s ties with Beijing, already a big investor from The Cape to Cairo.
Such a venture would not eclipse the dollar in Africa anytime soon, however, because the yuan is tightly managed and traders are wedded to the greenback’s flexibility.
African businesses can already get quotes for their currencies against the yuan . A clearing house would cut the need for dollar settlements, speed things up and reduce costs.
But the real prize for Kenya, or any other African host, would be the symbolism of being the continent’s business gateway with Asia’s economic power, even if business starts modestly.
Such an exchange would also be the first outside Asia.
Its prospect is a measure of China’s challenge to Africa’s traditional partners in Europe and the United States and reflects the increasing attractions of a continent with some of the world’s fastest growing economies.
“Even if the benefits to business may be slightly overblown by diplomats on both sides, I don’t think you can understate the symbolic aspect,” said Shilan Khan, Africa economist at London-based Capital Economics.
