East and southern African countries debate accepting Chinese Yuan as reserve currency at the conference in Zimbabwe

Harare: Influence and scope of the Chinese Yuan which was accepted as a global ‘Reserve Currency’ by the International Monetary Fund two years ago, is on the rise. In an economic conference held in Africa on Monday, there were comprehensive discussions about officially accepting Yuan as a Reserve Currency. A few African countries including Angola, have already accepted Yuan as a currency for internal transactions within the country.

A special meeting of the group ‘Macroeconomic and Financial Management Institute of Eastern and Southern Africa’ (MEFMI), which comprises of 14 member countries from Eastern and Southern Africa, is being held in Harare, the capital of Zimbabwe. Deputy Chiefs and the Standing Deputy Secretaries of the Central banks in these 14 countries are attending the meeting. Similarly,officials from the ‘African Development Bank’ and private financial institutions are also present at the meeting. The importance of the Chinese Yuan as a reserve currency was underlined during the discussion on the topic ‘Management of Sovereign Reserve Funds’.

MEFMI includes Angola, Kenya, Botswana, Burundi, Lesotho, Malawi, Mozambique, Namibia, Rwanda, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe. ‘Most of the countries in the MEFMI have taken either a loan or aid from China. Hence, it would be appropriate to use Yuan for repayment. Therefore, the policy making officials in these countries need to take rapid steps to incorporate Yuan. Yuan is now the leading currency for trade in the African continent,’ the MEFMI spokesperson Gladys Siwela Jadagu underlined the importance of Yuan in these words.

China has disbursed loans worth more than $ 100 billion to the African countries in the last two decades. Since the past few years, China has stressed on conducting most of the trade with the African countries in Yuan and has signed currency exchange agreements with more than 10 countries including Angola, Kenya and Zambia. Some of the African banks have also been authorised to deal in the Yuan currency.

In the last two years, China has operationalised international indices based on Yuan in financially important sectors like gold and crude oil and there is a substantial rise in these transactions. The European countries and Russia are at loggerheads with the United States since the last few months and these countries have clearly indicated increase in cooperation with China. In view of this, the steps taken by the African nations to accept Yuan as a reserve currency prove to be significant.