JOHANNESBERG, May 18 – Absa Group Ltd. is considering joining China’s cross-border payment system as African trade with China continues to expand and demand grows for cheaper settlement in yuan.
The South African lender is looking at integration with China’s Cross-Border Interbank Payment System (CIPS), which allows direct yuan payments outside the US dollar system, according to Absa Kenya Chief Executive Abdi Mohamed.
The move would help reduce the need for African traders to convert local currencies into dollars before buying yuan, a process that adds costs and increases exposure to foreign exchange swings and dollar shortages.
“We are part of early discussions on the system and what it could mean for the continent,” Mohamed said. “It is a useful addition to existing global payment networks.”
Other African banks are already moving in the same direction. Standard Bank Group Ltd., the continent’s largest lender, connected directly to CIPS in November and has processed about 9.5 billion rand ($572 million) in transactions in six months. Ecobank Transnational Inc. has also said it is applying to join.
Absa, which operates across 12 African markets, said direct yuan settlement could simplify trade payments and improve efficiency for clients engaged in China-linked commerce.
Mohamed said Absa Kenya aims to double pre-tax profit over the next five years, building on recent growth, but warned that global tensions, including the Iran conflict, could raise supply chain costs and push up inflation.
He added that while credit quality has remained stable, rising import costs are likely to increase demand for loans and larger credit lines from businesses.
Absa is also exploring acquisitions in Kenya as part of a wider push to expand its market share in the region.
