The renminbi is fast becoming a global currency and its use in the Middle East and Africa is rising in line with China’s Belt and Road ambitions in the region. In the last few years, China has agreed bilateral currency swaps with Nigeria, Egypt, the UAE and South Africa, among others, and central banks are looking to include the renminbi as a reserve currency. These measures will bring down the cost of doing business with China and help diversify foreign currency reserves for countries that rely heavily on dollars.
The need for renminbi clearing has also increased. Agricultural Bank of China stands out as the best bank in the region, not only through the support it gives to Chinese businesses working there, but also because the bank provides renminbi clearing through its branch in the Dubai International Finance Centre – one of just four renminbi clearing banks in the Middle East and Africa.
The clearing bank in Dubai has helped to streamline cross-border business between the UAE and China and to build renminbi liquidity. China is the UAE’s largest trading partner, accounting for 12% of total imports to the UAE, with a total value of Dh79.9 billion ($21.8 billion) in 2017, up 14.7% in value compared with 2016.
The bank provides a number of financial services to facilitate cross-border business between China and the Middle East and Africa, including multi-currency fund settlements, guarantees and renminbi-denominated letters of credit.
The bank is also dedicated to furthering the internationalization of the renminbi by promoting products and financing in renminbi, as well as encouraging financial institutions in the region to open up clearing accounts.
ABC has also supported this year’s theme of BRI – the development of renewable energy in the region – in the Middle East and Africa. Most notable is the bank’s financial support in Dubai, where it provided $400 million for a 700 megawatt solar thermal power station project – the first time a Chinese state-owned bank has invested in a Middle East solar power project.