Dar traders still hesitant about Chinese currency

Although the Chinese currency -- Yuan Renminbi (RMB) -- is becoming increasingly internationalised, many traders in Tanzania still hesitate to use it to settle trade transactions because they do not know the benefits of doing so, a banker revealed.

Ecobank Tanzania managing director Enoch Osei-Safo, told The Citizen on the sidelines of the bank’s meeting with clients in Dar es Salaam earlier this week that large companies still choose the US dollar to trade in, which has been the main vehicle for many years. 

At least four commercial banks in Tanzania have specific desks that accept transactions in the Chinese currency. They are Stanbic Bank Tanzania, Ecobank, CRDB Bank and National Bank of Commerce (NBC).

Between July 2012 and April 2013, 16 more countries started using the RMB for more than 10 per cent of their payments with China and Hong Kong. 

A recent survey released by a Hong Kong-based bank, HSBC, has it that by 2015, one-third of China’s international business transactions will be made in Yuan.

“Evidently, yuan usage is growing among international transactions but in Tanzania, a greater awareness is needed to promote it. It is very important at this time considering the growing trade relationships between Tanzania and China,” he said.

By transacting directly in Chinese currency, Tanzania traders stand to get discounts.

Chinese leaders have pledged to offer between three and five per cent discounts to trading partners who settle their transactions in the currency.

Mr Japhet Fungo, Ecobank’s Kariakoo branch manager pointed out that usage of the currency was a new development and required time to be promoted and make local businessmen aware of the benefits.

He said that it is better to have more choices and diversification is critical so that businesses do not put all seeds in one basket. China is the second largest economy in the world, he said, saying it is advisable for people to use RMB when they are specifically dealing with Chinese counterparts.

“The usage of RMB can enable countries with trade surplus that are keen to invest in China, reduce their cost and exchange rates owing to diverse currency conversion,” he said. 

Usage of the currency in cross-border trade transactions also reduces the risk of currency mismatch in the Chinese economy. It also makes a more flexible RMB exchange rate less costly to China’s real economy, according to Mr Fungo.
Source: The Citizen, reported by Victor Karega,from Dar es Salaam, Tanzania
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