Yuan Settlements to Curtail West's Influence, Boost Russia-Africa Trade, Expert Predicts

Recently, during his meeting with Chinese President Xi Jinping, Russian President Vladimir Putin stressed that Moscow supports the idea of using the Chinese yuan in trade with Asia, Africa, and Latin America, stressing that national currencies will further replace the US dollar in international trade.

Switching to China's yuan in settlements between Russia and Africa will make mutual trade "sanctions proof" and beneficial for African nations in different ways, Ovigwe Eguegu, a Nigerian policy adviser at consultancy Development Reimagined, specializing in geopolitics with particular reference to Africa in a changing Global Order tells Sputnik, referring to Putin's recent statement on Russia's readiness to carry out trade with Asian, African and Latin American nations in the Chinese currency.

In particular, the expert outlines that the possible yuan switch will make African nations and Russia less dependent on both the United States and the greenback.

"Having Russia and Africa work out the actual settlements in yuan is going to make trade sanctions-proof," Ovigwe Eguegu says, noting that thanks to such a policy, African nations' relationship with Russia "will not be subject to U.S. influence to the extent it currently is.

The geopolitical analyst notes that the new trading environment will be especially benefitial for those African nations that are now under sanctions, as well as for those trying to protect their economies from potential sanctions.

"That move would be beneficial for countries that are currently under sanctions like Zimbabwe or countries that are trying to make their economies more sanction-proof, particularly for certain commodities that they get from Russia, which is [...] key for their national security and development", he notes.

Eguegu also pointed out that the countries would no longer have to pay transaction fees since they would be carrying out trade in the yuan instead of the greenback.

"For instance, a Nigerian importer would have to first convert his naira to US dollars and then convert the dollars to renminbi [yuan]", the policy adviser states. "Those transaction fees are needless if they are trading in yuan. Similarly, a Nigerian importer that may want to import wheat, for instance, from Russia, would do the same thing. He would convert to dollars and from dollars to rubles, and the rubles back to dollars back and forth. And those transaction fees would also be avoided," he explained.

Among other issues, the expert spotlights the fact that the prospect of Russia and African countries switching to the yuan as a currency for mutual settlements symbolizes their dedication to multipolarity, adding that these countries will have to bolster their partnership in this regard.

"The shared interests in multipolarity is only going to be reinforced by Russia and Africa trading in yuan because when we talk of multipolarity, it has to be substantiated," Eguegu states. "One of the ways to substantiate that is to actually have independent centers for trade or trade dynamics that doesn't really require approval or clearance using SWIFT or Western mechanisms," he said.

After the onset of the special military operation in Ukraine, Russian banks were cut off from SWIFT by the European Union (EU). The decision was made by the Council of the EU and it was published on March 2 in the Official Journal of the European Union after which it immediately entered into force.

The expert points out that yuan settlements will, first and foremost, strengthen the dynamics towards multipolarity, and secondly, "allow Russia-Africa trade to progress in a natural manner".

He reiterates that the switch to the Chinese currency will boost trade between Russia and the African continent while reducing any possible negative impact from the West.

"So with Russia, China and Africa as a whole coming together to try to build an alternative trade settlement system that would actually allow Russia-Africa trade to grow irrespective of the measures taken by the West to isolate Russia", expert concludes.

During the March 21 meeting with Xi Jinping, President Vladimir Putin said that Russia was eager to carry out trade operations with Asia, Africa and Latin America using the Chinese currency.

The president stressed that today two-thirds of the trade turnover between Russia and China is carried out in rubles and yuan, adding that the use of national currencies in trade with other countries will continue to develop.