Kenyan bank has opened a new branch that will host a clearing house for Chinese renminbi (RMB) that would allow the settlement of trade deals to help boost economic growth.
The National Bank of Kenya (NBK) said the Premium Branch located at an upscale shopping mall, Yaya Centre, in Nairobi, will benefit traders as it would cut the costs they incur when converting from the Kenyan shilling to the Yuan.
NBK Managing Director Munir Mohamed said during the launch on Wednesday evening that the clearing centre will accelerate trade between the two nations and ensure efficient service.
“We are approaching the issue from a holistic perspective and offering a unique service that will provide an opportunity for traders from Kenya and China to conduct business by making the Chinese currency available without intermediation,” Mohamed said.
He said bilateral trade between Kenya and China which has expanded enormously requires a flawless payment system that does not have to go through another intermediary currency.
“Africa should make sure that the RMB is internationally accepted for conversion from RMB and vice versa in order to balance trade between Africa and China,” Mohamed said.
Experts say the clearing house could boost trade between the two countries by easing commercial transactions as Kenyan exporters normally have payments processed through a lengthy process that involves physically sending Chinese payment cheques back to the country for clearance and payment.
However, with a clearing house, the cheques could be processed locally through an agreement between the two central banks thus expediting payments and easing the cost trade.
Mohamed said the bank has opened a Chinese Unit and hired a director in charge of Chinese business development in order to tap the growing trade that has seen Chinese nationals troop to Kenya to run businesses and work on projects funded by the Asian nation.
The move by a Kenyan bank to host the clearing centre would also enable Renminbi which is yet to gain the status of the U.S. dollar as an international unit despite the country’s huge trade portfolio, emerge as a regular common settlement currency.
Chinese business community have been trooping to Kenya in large numbers with officials from the Industrial and Commercial Bank of China (ICBC) promising the East African nation to brace itself for more investors from Beijing.
ICBC chairman Jiang Jianqing said this week that though it was the first time for the bank’s top officials to visit Kenya, they were impressed by the progress going on in Kenya and pledged to bring more investors.
Experts say China has gained significance as a trade partner for Kenya as evidenced increasing Chinese imports in Kenya, noting that a Yuan clearing house would help grow Kenya’s currency trading business.
Data from the Chinese embassy in Nairobi indicated that in 2014 total bilateral trade between Kenya and China reached 5.09 billion dollars, a 53 percent increase from the previous year.