South African importers and exporters trading with China could benefit from faster payment settlement and fewer currency conversions after Standard Bank was authorised to jointly clear renminbi (RMB) transactions in Africa.
The arrangement could reduce delays in trade transactions where the release of cargo or shipping documents depends on payment confirmation, Standard Bank told Freight News.
Standard Bank announced on June 26 that it had been jointly authorised with the Industrial and Commercial Bank of China (ICBC) by the People's Bank of China (PBoC) to clear RMB transactions in Africa.
The arrangement gives businesses direct access to China's onshore financial system and is expected to reduce transaction costs and speed up settlement.
One of the most significant operational benefits would be the removal of an additional currency conversion step that has long been standard practice for South African businesses trading with China, said Richard de Roos, Standard Bank Head of Operations for Corporate & Investment Banking.
"Most South African trade with China is still done in US dollars, which means paying to convert rand into dollars and then dollars into renminbi," said De Roos. "We can settle in renminbi directly so that companies deal in the currency their Chinese counterpart actually uses, with fewer middlemen and less cost along the way."
The change could have practical implications where cargo release depends on payment confirmation.
"Shipments often stall because payment or paperwork is slow," De Roos said. "Faster and more reliable settlement means goods and documents can be released sooner."
The new clearing arrangement would not address delays at ports or customs but could reduce friction in the payment process that accompanied international trade transactions, he said.
