Tanzania is not left behind; already the Bank of Tanzania’s five per cent of foreign currency reserve is being held in Renminbi, according to BoT governor Prof Beno Ndulu.
“This is a reminder that that Africa should start giving Renminbi due consideration as both reserve, investment and settlement currency given China’s deepening engagement with the continent,” he said.
The governor said the decision by IMF reflects major shifts in the global economy and is a recognition of China’s progress over the last few decades in moving towards a more open and market based economy.
He added that China plays an increasingly prominent role in the global economy and it would seem entirely logical to that its currency should also play a role in international financial markets saying the trend has been clear that it is on the right track to enter the top tier of global currencies.
On the benefits of using the currency, the governor said it is profitable to transact bonds using Yuan than Euro and the US dollar because the Chinese currency is stable.
Economic experts from various countries who are attending the one day forum, believe the adoption is an important milestone in the integration of the Chinese economy into African financial systems.
They also called for the need for African countries to start re-aligning its economic plans towards China and India as they have shown high level commitment in engaging Africa at both commercial and political levels.
Yuan is the sixth currency to be included joining the U.S. dollar, Swiss Frank, the euro, the Japanese yen, and the British pound in the basket of currencies that make up the Special Drawing Right.
The Executive Director of the Macro-economic and Financial Management Institute of Eastern and Southern Africa (MEFMI) which facilitated the forum Caleb Fundanga said there is need for the region to put in place supportive measures to encourage use of the Yuan amid growing global demand for the currency.
“Greater usage of the currency in bilateral transactions will provide further impetus for trade and investments links between China and the region resulting in benefits for both sides,” he said.
He said the event has come timely as China is now dominating business in Africa hence the need for the continent to have access to the rapidly expanding offshore Renminbi market and greater access to the on-shore Chinese market.
Africa has been the leading aid recipient from China, its total aid stands at USD 94 billion currently.
In recent years, China’s economic presence in Africa has led to a heated debate.
China is by far the largest emerging competitor in the global aid market, and its unique way of designing and delivering assistance is challenging the traditional policies and practices of Western powers.