African bank governors meeting in Tanzania said on Monday that the adoption of the Chinese yuan by the International Monetary Fund (IMF) will make the currency play a major role in international financial markets.
Economic experts from various African countries attending the eastern and southern African governors forum also believed that the adoption of the yuan was an important milestone in the integration of the Chinese economy into African financial systems.
The IMF has adopted the yuan as part of its special drawing rights basket of currencies.
“Tanzania is not left behind, already the Bank of Tanzania’s five percent of foreign currency reserve is being held in Renminbi,” Tanzania’s Central Bank Governor Beno Ndulu told the forum facilitated by the Macro-economic and Financial Management Institute of Eastern and Southern Africa (MEFMI).
Ndulu said the adoption of the yuan was a reminder that Africa should start giving the Renminbi due consideration as both reserve, investment and settlement currency given China’s deepening engagement with the continent.
He said the decision by the IMF reflected major shifts in the global economy and was a recognition of China’s progress over the last few decades in moving towards a more open and market based economy.
The governor said China played an increasingly prominent role in the global economy and it was entirely logical that its currency should also play a role in international financial markets.
On the benefits of using the currency, Ndulu said it was profitable to transact bonds using the yuan than the euro and the U.S. dollar because the Chinese currency was stable.
The yuan is the sixth currency to join the U.S. dollar, Swiss Franc, the euro, the Japanese yen and the British pound in the basket of currencies that make up the special drawing right.
Caleb Fundanga, MEFMI Executive Director, said there was need for the region to put in place supportive measures to encourage use of the yuan amid growing global demand for the currency.
“Greater usage of the currency in bilateral transactions will provide further impetus for trade and investments links between China and the region resulting in benefits for both sides,” he said.
Africa has been the leading aid recipient from China. Enditem