How Standard Bank’s New RMB Clearing Role Could Change Africa-China Trade

Standard Bank and the Industrial and Commercial Bank of China (ICBC) have received joint authorisation from the People’s Bank of China (PBOC) to clear renminbi (RMB) transactions in Africa, becoming the first clearing institution named after an entire continent and the first to be jointly operated by two commercial banks.

The two lenders will operate as the “Renminbi Clearing Bank of Africa”, with the capacity to clear RMB transactions across 19 African countries.

The approval gives Standard Bank direct access to China’s onshore financial system, including capital markets, liquidity facilities and payment infrastructure, allowing businesses and financial institutions in Africa to settle transactions with Chinese counterparties more efficiently.

According to Standard Bank, the clearing bank will act as a central hub for RMB business across the continent, combining ICBC’s renminbi expertise with Standard Bank Group’s footprint in Africa to support trade, investment and cross-border payments.

Richard de Roos, head of operations for Corporate & Investment Banking at Standard Bank, said: “We are immensely proud to be the first African bank to be granted clearing status. This status speaks to our purpose of promoting the continent’s growth and meeting our clients where they need us most.”

Direct RMB Clearing

The authorisation changes how African businesses can transact with suppliers and partners in China.

Previously, an importer in countries such as Kenya or South Africa purchasing equipment from China would often need to convert local currency into US dollars or euros before the funds were converted into RMB for settlement in China.

The process typically involved correspondent banks and international payment networks, adding foreign exchange costs and extending settlement timelines.

With Standard Bank and ICBC acting as a localised RMB clearing hub, transactions can now be settled directly in renminbi through infrastructure connected to China’s Cross-Border Interbank Payment System (CIPS). This reduces reliance on intermediary clearing centres in New York or Europe.

Lower Transaction Costs

One of the immediate benefits of direct RMB clearing is the reduction in foreign exchange costs.

Businesses will be able to exchange local African currencies directly into RMB and vice versa, eliminating the need for multiple currency conversions. Avoiding the conversion from local currencies into US dollars and subsequently into RMB can lower transaction expenses for importers and exporters.

Reduced payment friction may also help businesses importing Chinese machinery, electronics and industrial inputs manage costs more effectively.

Reduced Dependence on US Dollar Liquidity

Several African economies periodically experience shortages of US dollar liquidity, making it difficult for businesses to obtain foreign exchange needed for imports.

The introduction of direct RMB settlement offers companies an alternative payment channel for trade with China, Africa’s largest bilateral trading partner. Businesses may be able to continue importing goods and services using RMB even when access to US dollars is constrained.

The development could also encourage some African central banks and financial institutions to diversify a portion of their reserve holdings into RMB to support trade settlement needs.

Faster Settlement Times

Cross-border payments routed through traditional correspondent banking networks often take several business days to complete due to processing across multiple institutions and time zones.

Direct access to China’s payment infrastructure through the Renminbi Clearing Bank of Africa is expected to shorten settlement times, enabling same-day or near real-time processing for eligible transactions.

Faster settlements can support supply chain efficiency, particularly for manufacturers and traders that depend on components and finished products sourced from China.

Growing China-Africa Financial Links

The move further deepens financial ties between China and Africa. ICBC already holds a 20% stake in Standard Bank, making the partnership one of the most established banking collaborations between Chinese and African financial institutions.

The establishment of a continent-wide RMB clearing platform expands China’s financial presence in Africa and provides businesses with an additional settlement channel alongside traditional US dollar and euro-based systems.

The Renminbi Clearing Bank of Africa is expected to support a growing volume of trade, investment and capital market activity between African economies and China as demand for alternative cross-border payment mechanisms continues to increase.

Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.