Internationalization of Chinese yuan to boost Africa's economy: economist

NAIROBI - Internationalization of the Chinese currency renminbi, or yuan, will have a positive impact on Africa's economy, a senior economist said on Friday.

Chief economist of CFC Stanbic Bank East Africa Region Jibran Qureishi told Xinhua in an exclusive interview in Nairobi that the African continent is a huge importer of goods from China.

"So the internationalization of the renminbi could be a silver bullet because it will help Africa to reduce its import bills," Qureishi said.

Qureishi said the industrialization progress of various African countries has been stalling as cost of manufacturing remains high.

"So for the foreseeable future Africa might rely on imports even as it tries to improve the competitiveness of its products," he said.

Qureishi noted that the internationalization of the renminbi is both a practical and a symbolic step.

"It will play a role in increasing Chinese overseas investments into Africa," he said, adding that the internationalization of the renminbi will help ease the process of settling trade transactions and boost trade between China and Africa.

He predicted that bilateral trade will not decrease even as the Chinese economy slows down.

"In fact, certain African countries will continue to have increased trade links with China," he said.

As African currencies witnesses devaluations against a strong dollar, Qureishi suggested African countries cushion themselves against foreign currency volatility by holding some yuan assets in their foreign currency reserves.

"However, it does not make sense for China to devalue its currency just to improve the competitiveness of its exports, because China is now re-balancing its economy so that it relies on domestic consumption rather than on exports in order to drive economic growth," he said.

CFC Stanbic Bank is part of the Standard Bank Group which is the largest bank in Africa in terms of assets. The Industrial and Commercial Bank of China owns a 20 percent stake of the Standard Bank Group.