Absa eyes yuan platform amid booming China-Africa trade

China’s growing trade ties with Africa are pushing some of the continent’s biggest lenders to rethink how cross-border payments are handled.

As businesses search for faster and cheaper ways to pay Chinese suppliers, banks are beginning to look beyond the U.S. dollar. 

Absa Group, the Johannesburg-based financial services provider, is among the latest lenders considering a direct link to China’s Cross-Border Interbank Payment System, known as CIPS.

The platform allows financial institutions to settle transactions directly in Chinese yuan, reducing the need to route payments through the dollar. 

The move highlights a wider shift across Africa’s banking industry as trade with China continues to expand.

Chinese companies remain deeply involved in African infrastructure, manufacturing and consumer markets, while African importers increasingly rely on goods sourced from China. 

Speaking in Kigali, Rwanda, Abdi Mohamed, chief executive of Absa’s Kenyan business, said the lender is taking part in early discussions around the payment platform and the opportunities it could create for African markets. 

“It’s a good addition to the global payment systems that we already have,” Mohamed said, pointing to growing demand from businesses trading with China.

African banks shift toward yuan payments 

African companies trading with China often face a costly process that involves converting local currencies into dollars before exchanging them again into yuan.

That system can raise transaction costs and expose businesses to foreign-exchange shortages and currency swings. 

Direct yuan settlement is increasingly being viewed as a way to simplify payments and reduce pressure on dollar liquidity in African markets. 

Standard Bank Group became the first African lender to connect directly to CIPS last year.

The bank has already processed billions of rand in yuan-linked transactions.

Ecobank Transnational has also said it plans to join the platform, underlining growing interest among regional lenders.

Absa targets growth in East Africa

Absa, South Africa’s third-largest lender, operates across 12 African markets and is looking to deepen its presence in East Africa.

Mohamed said the bank is also considering acquisitions in Kenya as it seeks to expand market share and grow earnings over the next five years. 

At the same time, the lender is watching global risks closely.

Mohamed said tensions in the Middle East, including the conflict involving Iran, could disrupt supply chains, increase inflationary pressure and raise the cost of imported goods. 

Absa expects businesses affected by higher import costs to seek larger credit facilities and increased financing support, even as concerns remain over how prolonged economic pressure could affect loan performance in the months ahead.