• 202 days Could Crypto Overtake Traditional Investment?
  • 206 days Americans Still Quitting Jobs At Record Pace
  • 208 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 211 days Is The Dollar Too Strong?
  • 212 days Big Tech Disappoints Investors on Earnings Calls
  • 213 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 214 days China Is Quietly Trying To Distance Itself From Russia
  • 215 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 219 days Crypto Investors Won Big In 2021
  • 219 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 220 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 222 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 222 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 226 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 226 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 227 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 229 days Are NFTs About To Take Over Gaming?
  • 229 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 232 days What’s Causing Inflation In The United States?
  • 233 days Intel Joins Russian Exodus as Chip Shortage Digs In
How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

Frank Knopers

Frank Knopers

Frank Knopers has studied Business Administration at the University of Twente in Enschede and obtained a Master degree in Financial Management with his research on the…

Contact Author

  1. Home
  2. Markets
  3. Other

The Yuan Could Become Africa’s New Trade Currency

China Yuan

Central bankers from various African countries are considering using the Chinese yuan as trade currency for the region, according to Chinese news agency Xinhua. Soon, representatives of central banks from fourteen different African countries will meet in the Zimbabwean capital Harare to further discuss these plans. Representatives of the African Development Bank will also attend this African summit meeting.

According to Gladys Siwela-Jadagu, spokeswoman for the Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI), it is a logical step for many African countries to use the yuan as a currency for international transactions. She said the following about this in an interview with Reuters.

“Most countries in the MEFMI region have loans or grants from China and it would only make economic sense to repay in renminbi (Chinese yuan). This is the reason why it is critical for policy makers to strategize on progress that the continent has made to embrace the Chinese yuan which has become what may be termed ‘common currency’ in trade with Africa.

With China as the largest trading partner of over 130 countries, the main challenge for African countries is how to benefit from the new pattern of international commerce.”

Chinese yuan as trade currency for Africa

The MEFMI is a regional institute with fourteen countries affiliated to it, namely Angola, Botswana, Burundi, Kenya, Lesotho, Malawi, Mozambique, Namibia, Rwanda, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe. These countries are doing more and more business with China, for example by exporting raw materials in exchange for Chinese involvement in improving infrastructure. Related: What Really Drives Gold Prices?

Currently, these countries have predominantly U.S. dollars in their reserves, but due to the increasing trade with China and the loans in yuan for infrastructure investments, it is no longer obvious for countries in the region to hold mainly dollars in their reserves. In fact, according to MEFMI’s spokesperson, there is a limited chance that Western countries will increase investments in Africa over the next few years.

China is promoting the use of yuan in international trade, but so far only with limited results. The dollar is still the dominant world trade currency, but due to changes in global trade and investment flows the yuan is expected to gain importance over the next few decades.

By Frank Knopers via Geotrendlines.com

More Top Reads From Oilprice.com:

Back to homepage

Leave a comment

Leave a comment