Business
Kenya looking to host Africa’s first yuan clearing house – to cut need for dollar settlements
The official said London’s clearing house was not completely up and running, as it still cleared trades through Hong Kong.
“So if any region builds up the infrastructure in future, it would be a leap for the plans for offshore renminbi centers,” said the official, declining to be named due to sensitivities surrounding Chinese currency policy.
Alongside South Africa, he suggested even Tanzania, a smaller economy with longstanding ties with Beijing, had been spoken of as a possible site, though he said he believed South Africa might be best suited in Africa.
Both those nations were stops on a tour of Africa by Chinese President Xi Jinping in March, soon after his appointment. That trip underscored China’s focus on Africa, building on a trade program that has helped funded the development of new infrastructure.
In the bid to deepen economic links, oil exporter Nigeria has gone a step further by switching part of its reserves to yuan. It now holds about US$500 million of its US$47 billion reserves in the Chinese currency, an official said.
But even as Africa starts shifting more business east, the hegemony of the dollar seems assured for now. For a start, the minerals and oil China buys or extracts from Africa to fuel its growth are priced in dollars.
African dealers also say a deterrent to building more business in yuan is that the currency is carefully controlled, trading 1 percent either side of a mid-point set by China’s central bank each day, even if the grip is starting to ease.
