After South Africa and Zambia, Mauritius is now home to the third clearing house in renminbi (RMB, the Chinese currency) on the African continent.
Officially launched on December 16 during a ceremony at the headquarters of the Bank of Mauritius, this center aims to facilitate trade with China, not only for Mauritius, but also the whole region, several experts have indicated, emphasizing the growing importance of the RMB in world trade.
For Mardayah Kona Yerukunondu, first vice-governor of the Bank of Mauritius, this RMB clearing house will certainly have “repercussions on the prosperity of the financial sector and the growth of the economy in general” in Mauritius. In fact, with the inclusion of the RMB in the exchanges, Mauritius would have a new monetary policy framework from January 1, 2023, he explained.
An important change in view of the growing trade between Mauritius and China, as recalled by Li Lianhong, Managing Director of the Mauritian branch of the Bank of China (Bank of China). “Statistics show that China is Mauritius’ largest source of imports. Nearly 18% of Mauritian imports came from China in 2021,” he noted, calling the launch of this chamber “timely.” .
Thus, “local importers can ask their Chinese suppliers to charge them in RMB, and local banks can use the local RMB clearing center for their international settlements. In this process, I think local banks should cooperate from a perspective national and not from a commercial perspective”, continued Mr. Li according to whom it would therefore be “preferable” to make all payments in RMB via this new clearing house.
It is the Bank of China which has been appointed by the Bank of Mauritius to manage this center. It “is headquartered in China, it has branches all over the world. So for us, it was definitely able to solve renminbi issues, facilitate the development of renminbi, which is what we wanted to achieve”, remarked Mr. Yerukunondu.
According to the latter, his country is “located between China and Africa, between other countries and Africa. We are in a position that allows us to travel around the world, digitally”.
Mauritius also has an extensive payment infrastructure. It is a member of SADC RTGS (Regional Cross-Border Real Time Gross Settlement System), COMESA REPSS (Regional Payment and Settlement System) and PAPSS (Pan African Payments System). “Where we are, we have all the necessary prerequisites to be a hub for renminbi clearing,” he added.
Daniel Essoo, Managing Director of the Mauritius Bankers Association, agrees, noting that the Mauritian central bank has also hosted the Indian RuPay initiative. “The idea is to link different payment systems with different financial systems and Mauritius is really at the heart of this network of payment systems. This means that now cross-border flows could go through Mauritius,” he said, noting that the archipelago was in a time zone “conducive to the execution of payments”.
For Mr. Li, who recalled that Mauritius has left the FATF (Financial Action Task Force) gray list, the RMB clearing house is not only for business, but also to facilitate the use of RMB in cross-border transactions and to bring business investment and economic cooperation between China, Mauritius and Africa to a new level. Also, he thought, this chamber “will further strengthen the positioning of Mauritius at the regional and international level”.
“China has been Africa’s biggest trading partner for a decade and trade hit a record high of $254 billion last year. 3% of that trade is in RMB, which is a reasonable norm, according to SWIFT.International RMB payments accounted for 2.7% of all currencies in 2021, making RMB the first largest payment currency in the world.RMB’s share has steadily increased and in January this year , it reached 3.2% of all currencies,” added the head of the Mauritian branch of the Bank of China.