StanChart boss backs use of yuan for trade with China

StanChart's East Africa chief executive Lamin Manjang. PHOTO | FILE 

By VICTOR JUMA

Increased global usage of Chinese currency is expected to cut the cost of doing business between Kenya and the Asian nation, Standard Chartered East Africa chief executive Lamin Manjang had said.

Mr Manjang on Monday told a group of StanChart clients that last year’s decision by the International Monetary Fund (IMF) to add the Renminbi, also known as the Yuan, to its ‘Special Drawing Rights’ basket was positive for Africa-China trade.

A yuan clearing centre was recently opened in the Middle East, while a similar one is expected to be opened in Africa.

The National Bank of Kenya had announced the creation of a renminbi clearing centre last year. Equity Bank also has select branches that attend to Chinese businesses, while most Kenyan banks already exchange the shilling for the yuan freely.

Mr Manjang said the adoption of the currency by local companies and traders in Africa and the Middle East has been gradual, but positive.

“Importers and exporters who use the renminbi have the opportunity to mitigate risks and reduce costs associated with the three-way foreign exchange from Kenya shilling to the US dollar then Chinese yuan when trading with China,” said Mr Manjang.

“We expect suppliers to lower their prices to reflect lower foreign exchange costs,” he added.

Inclusion of the yuan in the IMF’s basket of currencies gives its 188-member states and their central banks the benefit of choice and diversity in hedging currency risk and increasing investment opportunities in the currency.

“The internationalisation of the RMB continues to give emerging markets an important alternative when it comes to currency investment and hedging,” said Mr Manjang. China is becoming an increasingly important trade and investment partner for Africa.