SWIFT data shows that Renminbi (RMB) usage in payments in South Africa increased by 65% over the last 12 months and by 112% in the last two years, moving the country from position No. 30 in July 2014, to No. 24 in July 2016.
Excluding domestic traffic, RMB payment messages increased in volume by 70% in the last 12 months. In addition, nearly 40% of RMB payments by South African institutions have been offshore payments exchanged with countries other than mainland China and Hong Kong, compared to 16% in July 2015.
"South Africa has experienced a major shift in RMB growth over the last two years, strengthening the country's trade relations with mainland China and Hong Kong," says Harry Newman, Head of Banking, SWIFT.
"The establishment of an RMB clearing centre in South Africa in July 2015, as well as Singapore's increased use of the RMB for payments with South Africa, have been a catalyst for RMB growth in the region."
MoU on China-Africa Cooperation
During the Forum on China-Africa Cooperation, held in Johannesburg in December 2015, China and representatives from 50 African countries agreed to actively implement a Memorandum of Understanding (MoU) on the Promotion of China-Africa Cooperation in the area of infrastructure (fields of railway, highway, regional aviation networks and industrialization).
The MoU encourages Chinese businesses and financial institutions to expand investment through various means, such as Public-Private Partnerships (PPP). It also aims to increase the commercial exchanges between China and the African continent and should positively impact RMB volumes in the future.
In July 2016, the RMB bounced back to its position as the fifth most active currency for global payments by value with a share of 1.90%, a slight increase from 1.72% in June 2016.
Overall RMB payments value decreased by 0.68% compared to June 2016, whilst in general all payments currencies decreased by 10.08%.