ZIMBABWE is lobbying to be included among African offshore clearing centres for the Chinese currency, the renminbi (RMB), as it seeks to grow trade between the two countries and boost confidence in the local banking sector, a top diplomat has said.
The RMB was added to the IMF’s basket of currencies two years ago, meaning it is now a reserve currency that can be used as a unit of exchange in international trade and international cross-border transactional settlements.
Presently, the UK is the world’s largest clearing centre for the RMB outside Greater China, followed by Singapore.
Zimbabwe hopes to reach an agreement with Beijing on the offshore centre during the 2018 Forum on China-Africa Co-operation that officially opens tomorrow. This year’s edition of the triennial summit will be co-chaired by host President Xi Jinping and South Africa’s President Cyril Ramaphosa.
Zimbabwe’s Ambassador to China Mr Paul Chikawa told our Harare Bureau last week that Harare was also pursuing opportunities in e-payments, telecommunications, infrastructure, and power transmission and distribution. Zimbabwe is also angling for a market for its agricultural produce.
Ambassador Chikawa said: “If all goes well, we will be so keen to be one of the centres in Africa, if not the leading centre, to have an offshore Renminbi Centre. You know, Hong Kong — which is part of China — is; Singapore is; London is. That means it is a reserve currency in its own right.
“So, if we are able to fashion out an agreement in the area of banking, and we are hopeful that our own (Reserve Bank of Zimbabwe) Governor (Dr John Mangudya) — though he is not part of Focac — could find space and time to come here.
“We are pursuing certain interests, very formative stages to introduce the e-payment system as a part of dealing with the liquidity situation and also growing with the times. This is part of the vision, part of the dream, but it’s a lot bigger.”
President Emmerson Mnangagwa is in China for Focac 2018, and his delegation expects to conclude bilateral agreement in several projects at Focac.
“There was the mention of the NetOne Phase Three project, which is between our NetOne and Huawei . . . The NetOne Phase Three expansion project is going through some necessary paperwork before it is implemented. It’s going to be in two or three phases.
“Related to power generation, in March, President Mnangagwa commissioned the completion of Kariba South power extension, which added 300MW. So, you see, we are now producing additional power. So, logically and necessarily, you want to attend to your power transmission and distribution aspect of the whole power equation.
So one area that we will be hoping to quickly resolve this time around is support from our Chinese partners to make sure that the transmission and distribution aspect of the power has been dealt with. In other words, we are saying we have a partner that we are working with to quickly implement the transmission and distribution of the power; otherwise, the power generated will go to waste,” Ambassador Chikawa said.
The 7th Ministerial Conference of Focac — a platform of engagement between China and Africa on economic, social and political issues — runs from September 3 to September 4.
At the last Summit held in Johannesburg, South Africa in 2015, China pledged $60 billion in loans to Africa. Beijing has funded the expansion of Kariba South Power Station and Victoria Falls Airport, which has been completed. The $1,5 billion expansion of Hwange Thermal Power Station is underway.