Stanbic Bank Kenya’s parent company, Standard Bank, plans to join the China interbank payment system (CIPS) by the end of 2025, hoping to tap into the growing inflow of trade and investment from the Asian country.
The bank said the CIPS will help boost its chances of capturing opportunities from the growing trade and investment ties between China and Africa.
“At the moment we are using SWIFT, but Standard Bank is in the process of joining CIPS, which is the equivalent but for Chinese yuan-based transactions,” Stanbic Bank Kenya’s Senior Vice President and Head of the China Desk, Muya Guo, told the Business Daily.
The CIPS facilitates the clearing and settlement of cross-border transactions in the Chinese yuan. The system, launched in 2015 and backed by the People’s Bank of China, allows global banks to clear cross-border yuan transactions directly onshore within the country’s domestic financial system, instead of through clearing banks in offshore yuan hubs.
Stanbic said that the integration of CIPS into its payments system is a build-up of its partnership with the Industrial and Commercial Bank of China, which holds a 20 percent stake in Standard Bank following a $5.5 billion acquisition in 2008.
“Since 2008, Standard Bank and the Industrial and Commercial Bank of China have been strategic partners to grow business. From that standpoint of 17 years in partnership, we understand Chinese corporates and what they require to conduct operations in this market,” Mr Guo said.
“The African Continental Free Trade Area presents a very good opportunity for Chinese manufacturers who are looking to invest and set up factories in Africa as they target the intra-continental market. A lot of Chinese companies are coming here targeting the fast-growing middle-class market,” the official added.
The CIPS has become popular with those doing business with Chinese traders and investors who transact in yuan because it reduces reliance on intermediary banks and the US dollar, providing a viable alternative to SWIFT for international payments in China’s currency.
China has become a major trading partner for Kenya. Data from the Kenya National Bureau of Statistics (KNBS) shows that the country mostly relies on China for machinery as well as electrical and electronic equipment supply, making it the single largest source market.
For example, China accounted for about a fifth (19.23 percent) of Kenya’s Sh1.34 trillion total imports in the six months to June 2024, according to the KNBS numbers.
The value of Kenya’s imports from China jumped 25.56 percent over the six months to June last year to Sh257.70 billion, marking a turnaround from a 9.96 percent fall to Sh205.24 billion a year earlier.
