As businesses in Africa look to expand in China, cross-border payments can present a barrier to entry. Many transactions rely on the U.S. dollar as an intermediary, adding conversion costs and potential delays.
Ecobank has agreed to join China’s Cross-Border Interbank Payment System (CIPS), an effort to streamline payments between African businesses and their Chinese counterparts. The lender operates in more than 30 African countries, with a particularly strong presence in West Africa, including Nigeria and Ghana.
Ecobank could join CIPS as soon as this year. It then plans to launch a platform enabling direct conversion from domestic currencies into the Chinese yuan. By reducing reliance on intermediary currencies, the service could lower transaction costs for Africa’s merchants, while strengthening trade ties between Africa and China.
Addressing Interoperability
The planned integration also underscores a central challenge for African financial institutions: interoperability. Across the continent, countries have developed sophisticated digital and mobile payment infrastructure, yet relatively few intra-African transactions are processed entirely by domestic entities.
Instead, many payments are routed through banking infrastructure in the U.S. and Europe, adding fees, delays, and complexity to cross-border transactions. These inefficiencies highlight the need for cross-border payments.
Expanding the Yuan Global’s Reach
Improving the efficiency of international transactions was one of the motivations behind China’s development of CIPS. The system also supports Beijing’s ambitions to expand the yuan’s international use and reduce reliance on the U.S. dollar.
CIPS provides infrastructure for clearing and settling cross-border payments dominated in yuan. Although it’s sometimes discussed as an alternative to Swift, the two systems serve different functions. Their roles can overlap in cross-border payment arrangements, but they’re not direct equivalents.
China’s efforts come as the dollar continues to dominate global finance. According to the U.S. Federal Reserve, the dollar accounts for approximately 58% of international transactions across several measures, while the yuan’s share is much smaller.
The Fed estimates that the yuan accounts for roughly 2% of cross-border payments. While its international role remains limited, that could change as China expands the infrastructure supporting yuan trade. Harvard economist Kenneth Rogoff has suggested that the yuan could become a global reserve currency within five years.