ZAMBIA: Zambia and China have reportedly agreed to encourage greater use of their own currencies in trade and investment after a meeting in Beijing between Presidents Xi Jinping and Hakainde Hichilema.
The measure is meant to reduce reliance on the US dollar, which is the current settlement currency for trade between the two nations. If accomplished, the deal would be particularly beneficial for Zambia given the current mismatch between demand and supply for US dollars in the local market.
China is an important trade partner for Zambia, accounting for c.18 percent of direct exports and c.15 percent of imports. The recent development cements the strong tie between Zambia and China, which has been growing steadily since the establishment of the Zambia-China Economic and Trade Cooperation in 2007. According to data from the China Nonferrous Metal Mining Company, there are currently c.100 businesses with an investment portfolio of c.US$2.5bn operating in Zambia. The investment spans different areas of the economy including mining, transport, electricity, manufacturing and agriculture.