Standard Bank, Africa’s largest bank by assets, has become the first financial institution on the continent authorised to conduct transactions through China’s Cross-Border Interbank Payment System (CIPS).
This landmark integration, inaugurated this week at the South African Reserve Bank (SARB), is set to significantly simplify and accelerate trade clearance between Africa and China, the world’s largest export market.
Standard Bank was granted the license to offer CIPS transactions in June at the Lujiazui Forum in Shanghai, and the system has since gone live on the bank’s platforms.
Direct Payments Bypass Currency Hurdles
The CIPS acts as China’s primary payment infrastructure for the cross-border use of the Chinese Renminbi (RMB). Its integration into Standard Bank’s operations eliminates a key source of friction for commercial entities engaged in Africa-China trade.
This is because the CIPS allows for interbank payments to be cleared and settled directly in the RMB, removing the necessity of converting transactions into different intermediate currencies (like the US Dollar).
Crosby Mkhwanazi, Head of Client Coverage at Standard Bank Corporate and Investment Banking, emphasised the strategic importance, saying,
“We are keen advocates for Africa’s growth, and this new service is tailored to provide solutions that meet our clients’ needs where they operate. CIPS will enable more integration with a key trading partner and offer our clients diverse options for optimising their operations.”
Reinforcing a Vital Trade Corridor
The launch ceremony at the SARB underlined the governmental importance of the new system. Mr. Lesetja Kganyago, Governor of the SARB, was joined by Pan Gongsheng, Governor of the People’s Bank of China (PBOC), and Wang Hongbo, Chairman of CIPS. Both Governors stressed the critical nature of the system for future payment transactions between commercial entities in their respective countries.
The need for faster, more efficient payment rails is underscored by booming trade figures:
Growing Reliance on China
According to Standard Bank’s Trade Barometer 2024, 34% of surveyed African businesses now source their imports from China, a notable increase from 23% in May 2023.
China as Key Market
With China serving as Africa’s largest export market, the direct settlement provided by CIPS will accelerate transaction clearance, reducing costs and risks for thousands of businesses across the continent.
Mkhwanazi concluded that the CIPS is a “seminal touchpoint” in the evolution of the payments landscape, and that Standard Bank is confident this integration will provide innovative client solutions, further cementing the bank’s role as the leading facilitator of Africa-China commercial activity.