Uganda and China are set to deepen their trade ties following the introduction of a new payment system that will allow businesses to settle trade bills directly in Chinese yuan, reducing reliance on the dollar.
A report by Stanbic Bank indicates that access to China’s Cross-Border Interbank Payment System (CIPS), facilitated through its parent network Standard Bank, will enable faster, cheaper, and more predictable transactions for Ugandan traders dealing with Chinese counterparts. The system is expected to significantly cut transaction costs and reduce settlement timelines from several days to just a few hours.
By removing the need to route payments through the dollar, businesses will also avoid double currency conversions and foreign exchange risks. According to the report, the adoption of CIPS eliminates the role of multiple intermediary banks, a key source of delays and additional charges in international trade payments. ‘It will cut settlement times from standard multi-day processing down to just a few hours, protect local importers and exporters from unexpected shifts in dollar exchange rates, and offer full visibility and predictability over payment statuses so businesses can resolve delays quickly,’ the report states.
This will enhance transparency and traceability of payments, offering businesses clearer cash flow planning and reducing traditional clearance bottlenecks that have long complicated cross-border transactions. Under the new arrangement, outward telegraphic transfers are charged an equivalent of Shs60,000 per transaction, excluding external correspondent bank fees, while inward transfers attract a charge of 0.25 percent of the transaction value, with a minimum of $10 and a maximum of $50. Currency conversions between the shilling, dollar and Chinese yuan will attract a forex spread determined by Stanbic Bank’s Global Markets division, based on prevailing market conditions.
Stanbic also offers yuan-denominated accounts for businesses and individuals engaged in trade with China, helping them hedge against forex volatility. Speaking at the launch of the system, Stanbic Chief Executive Mumba Kalifungwa said the move would strengthen Uganda’s position as an attractive destination for Chinese investment. ‘Chinese cumulative Foreign Direct Investment in Uganda has surpassed the $1b mark, with licensed investments reaching approximately $1.2 billion. This follows a strong period where direct investment capital exceeded Shs3 trillion. China consistently ranks among Uganda’s top two sources of foreign investment,’ he said.
State Minister for Trade David Bahati described China as a critical trade and industrial partner, noting that investments from the country continue to grow, particularly in manufacturing, industry, and the oil sector.
‘I am extremely pleased with the launch of this payment system. It will accelerate payments for goods and services between the two countries, and I encourage more Chinese industrialists to invest in Uganda,’ he said. With trade between the two countries steadily expanding, the adoption of yuan-based settlement is expected to streamline transactions, improve efficiency, and further strengthen the Uganda-China economic corridor.