(Hong Kong, May 5) Hong Kong media reported that informal RMB (Chinese Yuan) payment networks are gaining traction in African countries like Kenya and Nigeria to reduce dependence on the US dollar.
According to reports on May 4, as geopolitical tensions rise, African traders are increasingly bypassing the US dollar in favor of the RMB, forming informal payment networks to facilitate trade with the world’s second-largest economy, China.
In Nairobi’s Eastleigh business hub, located northeast of Kenya’s capital, local merchants have established a localized payment system to settle payments for imported goods from China. Logistics companies play a crucial role, offering currency exchange services between the Kenyan shilling and the RMB. This allows merchants to pay in their local currency while the logistics companies transfer RMB to Chinese sellers on their behalf.
These companies also handle the transportation of goods, delivering shipments from procurement hubs like Guangzhou or Yiwu to offices in Nairobi. Chinese sellers receive direct RMB payments.
The report noted that similar informal transactions are common in Nigeria. Geopolitical tensions and RMB internationalization have driven the rise of this grassroots payment model. This trend highlights a broader shift in global trade, with more countries exploring local currency usage supported by China, accelerating the internationalization of the RMB.
Last month, a survey conducted by the International Monetary Institute of Renmin University of China revealed that over 60% of businesses are expected to engage in cross-border trade settlements using RMB by Q4 2024.