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State-owned National Bank of Kenya (NBK) said its Chinese yuan clearing house which was launched in Nairobi last year will help to boost Sino-Kenya trade.
NBK's Managing Director Munir Ahmed told Xinhua in Nairobi that the clearing house will make it easier for Kenyan businessmen to access the Chinese currency.
"It is now much more convenient for importers to get Chinese Yuan," Ahmed said during a ceremony where National Bank and Airtel signed a partnership agreement.
Under the agreement National Bank account holders will be able to access their funds using the Airtel mobile platform.
National Bank is currently one of the banks in Kenya that offers the Chinese currency.
Ahmed said that their service reduces the need for the business community trading with China to use financial intermediaries.
"As a result it reduces the cost of transactions of Sino-Kenya trade," he said.
Experts say the clearing house could boost trade between the two countries by easing commercial transactions as Kenyan exporters normally have payments processed through a lengthy process that involves physically sending Chinese payment cheques back to the country for clearance and payment.
However, with a clearing house, the cheques could be processed locally through an agreement between the two central banks thus expediting payments and easing the cost trade.
Last year, the Chinese Yuan was included into the International Monetary Fund's (IMF) basket of currencies that includes the U.S. dollar and the Euro.
One of the key priorities of the National Bank is to tap into the growing demand for the Chinese yuan that is fueled by expanding Chinese presence in Kenya. Ahmed said that China is a global leader in international trade.
"Therefore the easy access of the Chinese Renminbi will also help Kenyans to access the global value chains," he said.
National Bank Director Business Development Yao Sandra said that there is an expanding Chinese community in Kenya.
"They now find it convenient to access the Chinese yuan while in Kenya," Yao said.
She said that when Kenya traders land in China, they are now able to conduct business immediately.
National Bank, which is owned partly by the government, plans to take members of its business club to this year's Canton Trade fair.
Yao said the demand for yuan has especially increased among Kenyans heading to China for business trips and holiday goers.
"Business is brisk and the yuan has brought value to our customers. We are receiving new customers daily and the Chinese Banking Unit has experienced the most significant growth in the bank," Yao said.
Yao said the volume of transactions has made direct shilling to yuan business deals less expensive and bothersome by-passing the dollar.
"We have sufficient reserves to cater for the influx of customers. The service is also significant to the Chinese nationals who need to deal directly in yuan," Yao said.
Kenyan traders prefer going through the yuan transaction to settle their obligations because of increased costs and the volatility risks that three currencies expose them to.
The Chinese Embassy in Nairobi estimates that there are over 200 companies operating in Kenya, a factor which influenced the Central Bank of Kenya to include the yuan as a reserve currency given the growing trade between Kenya and China.
