RMB Internationalization: Ecobank, the pan-African bank, is in talks with Bank of China to establish direct RMB settlement before 2026

¬ Pan-African bank Ecobank is negotiating direct RMB settlement with Bank of China

¬ This move would bypass the US dollar, reducing trade costs between Africa and China

¬ It is part of a broader shift across African nations toward reducing dependence on the US dollar

A move aimed at simplifying financial transactions for thousands of African businesses is underway. Ecobank, the pan-African bank, says it is engaged in advanced discussions with Bank of China to establish a direct RMB settlement system by the end of 2026, eliminating the need to use the US dollar as an intermediary currency in trade with China.

For traders in Lagos, Nairobi, or Lomé purchasing goods from China, payment processes have historically been complex and costly. Paying suppliers in Guangzhou typically required first converting local currency into US dollars, then into renminbi—this two-step process increases banking fees and squeezes profit margins.

Ecobank aims to eliminate this bottleneck. "We are looking for opportunities to settle directly in renminbi rather than going through the US dollar," said CEO Jeremy Awori in an interview with Reuters. This initiative reflects current trade dynamics: China is Africa’s largest trading partner, far ahead of other nations. By 2025, China’s exports to Africa are expected to grow by 26% to $225 billion, pushing total bilateral trade to a record $34.8 billion. Beijing is also expanding its financial influence, with an estimated $39 billion in new contracts signed by 2025, making it the top source of new capital inflows in bilateral investments.

The trend away from the US dollar is accelerating

Discussions between Ecobank and Bank of China are part of a wider movement across Africa to reduce reliance on the US dollar. In November, South Africa’s Standard Bank took a similar step by joining China’s Cross-Border Interbank Payment System (CIPS).

Across the continent, governments and financial institutions are seeking alternative currencies as traditional ones become increasingly expensive and harder to access. Supported by the African Union, the Pan-African Payment and Settlement System (PAPSS) has already begun lowering currency conversion costs for intra-African trade. Some countries are taking further steps: Tanzania and Zambia have already restricted the use of the US dollar in domestic transactions, while the Democratic Republic of Congo plans to implement the same measure next year.

The growing influence of the BRICS+ group is also driving this trend. Egypt and Ethiopia have joined the bloc, which is committed to building a more multipolar financial system.

China is no longer the only country pursuing this strategy. A fierce competition is unfolding between China and the UAE over financial and logistics influence in Africa. Abu Dhabi is expanding its footprint through investments in ports and energy infrastructure, along with financial initiatives. The UAE has signed multiple currency swap agreements with Egypt, Ethiopia, Kenya, and Nigeria to promote transactions in dirhams and local currencies, thereby reducing dependency on the US dollar.

Source: ecofinagency

Original article: toutiao.com/article/1863208213453956/

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