The Bank of Ghana has introduced a new payment arrangement allowing Ghanaian businesses to settle eligible payments for Chinese imports directly from their Ghana cedi accounts. This development, piloted by Stanbic Bank Ghana, aims to reduce the country's reliance on the US dollar for bilateral trade with China. The initiative was disclosed by BoG Governor, Dr Johnson Pandit Asiama, at the 132nd Monetary Policy Committee press briefing.
Under the arrangement, eligible customers of Stanbic Bank Ghana can initiate yuan payments from their existing Ghana cedi accounts, subject to the bank's requirements and applicable regulations. The Chinese supplier receives payment in yuan, eliminating the need for multiple foreign exchange conversions. To use the service, businesses must hold an account with Stanbic Bank Ghana, select Chinese yuan as the payment currency, and submit the required supporting documents.
Stanbic's service utilizes China's Cross-Border Interbank Payment System (CIPS), a network designed to facilitate cross-border payments in Chinese yuan. Eligible payments submitted with complete documentation by 2 p.m. GMT can be processed for settlement by the next business day, subject to regulatory and compliance requirements. This new payment route is intended to make transactions between Ghanaian businesses and Chinese suppliers more straightforward.
The planned participation of Ghana Commercial Bank (GCB) in this arrangement could broaden access to the service, as indicated by the BoG Governor. GCB is preparing a similar service, which would provide importers with an alternative option for settling eligible invoices without first obtaining US dollars. This development presents an opportunity for businesses that regularly purchase machinery, electronics, and other merchandise from China.
The new arrangement offers businesses a more direct route to settle payments to Chinese suppliers in yuan without first having to source US dollars. This could potentially ease one of the foreign exchange hurdles associated with importing from China. However, the actual savings will depend on exchange rates, transaction fees, and the terms offered by individual banks.
Dr Asiama emphasized that the central bank is taking developments in the payment system seriously as commercial ties between Ghana and China expand. The BoG is exploring ways to facilitate trade between the two countries, and this new payment arrangement is a significant step in that direction. The arrangement does not, however, remove the need to meet documentation, compliance, and other applicable payment requirements.
The introduction of this new payment arrangement is expected to benefit businesses that regularly import goods from China, such as textiles, industrial inputs, and machinery. While it presents an alternative payment route, it does not guarantee that every transaction will be cheaper. Businesses will need to evaluate the costs and benefits of using this new service.
Key points
- The arrangement allows eligible customers to initiate yuan payments from their existing Ghana cedi accounts.
- Stanbic Bank Ghana is piloting the programme using China's Cross-Border Interbank Payment System (CIPS).
- The planned participation of GCB could broaden access to the arrangement.
