Africa’s central banks are considering the possibility of choosing the Chinese yuan (Renminbi) as one of their reserve currencies. China has become an important trader partner and lender to many countries on the continent.
African central banks are inclined to follow the example of banks globally to replace dollar reserves with the yuan. For example, the European Central Bank converted €500 million worth of its US dollar reserves into the Chinese currency last year.
China has become an important partner for Africa, funding projects ranging from energy and transportation to agriculture, telecommunications, and infrastructure. According to the Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI), “it would only make economic sense to repay in renminbi (Chinese yuan)”, Quartz reports. According to Quartz, Nigeria signed a currency swap worth $2.4 billion with China, allowing companies to avoid the difficulty of dealing in dollars while doing business in China and vice-versa.
Further reading on qz.com