Revolutionizing Sino-African business payments through technological innovation

Over the last decade, the economic landscape of Africa has been significantly reshaped, with China playing a pivotal role in its transformation. As of 2021, China emerged as Africa’s largest two-way trading partner, reaching an impressive $254 billion (Source: Reuters), surpassing far U.S.-Africa trade by a factor of four. Furthermore, China is now the most significant provider of foreign direct investment in Africa, with its investments supporting hundreds of thousands of African jobs and doubling the level of U.S. foreign direct investment.

This burgeoning economic relationship began to take a definitive shape around 2005, steadily gaining momentum and reaching a total trade of $200 billion by 2019. China's exports to Africa amounted to $113 billion, while imports from Africa had reached $78 billion in the same year. More than two-thirds of this trade had occurred with the Sub-Saharan countries, underscoring the region's economic significance to China. China had also been the third-largest source of remittances to Africa, following the United States and the European Union. (Source: Observer Research Foundation)

This increase in Sino-African trade is not merely reflective of China's growing economy; but also, the growth of Africa’s middle class, growing SME sector, and the surge in businesses and entrepreneurship in Africa. 

Here are some statistics about the trade with China with Africa:

  • Africa's exports to China have increased since 2000 at an annual growth of 56 per cent (Source: OCED).
  • China is now Africa's largest trading partner. (Source: Atalayar)
  • China's investments in Africa have increased by 1000% since 2000
  • The growth rate of business payments from China to Africa has been averaging 10% per year over the past five years.
  • In 2022, the total value of remittances sent from China to Africa was $15 billion. 
  • In 2021, the total value of business payments between China and Africa was $254 billion. (Source: Statista)
  • The top five African countries that receive the most business payments from China are South Africa, Nigeria, Angola, Egypt, and Kenya. 

Currently, more than 1,000 Chinese companies have found a foothold in Africa's markets, ranging from small private firms to large state-owned enterprises. Collectively, these companies contribute to the African economy by creating jobs, introducing new technologies, and stimulating local development. They operate with substantial degrees of freedom while enjoying access to Chinese investment capital on favourable terms.

From the African perspective, the benefits of this increased trade with China are multi-dimensional. This new economic alliance has led to high economic growth rates from the late 1990s onwards. Chinese demand for African exports has improved Africa's terms of trade, yielding additional financial revenues. 

The presence of China as an additional trade partner has enabled African countries to diversify their trade and reduce dependence on traditional trade partners such as the US and EU.

Looking ahead, as China continues to grow and its demand for African resources persists, we can expect this economic partnership to deepen further. 

The Challenges of Sino-African Trade

Despite the significant growth in trade and remittances between Africa and China, there are challenges that highlight the urgent need for improved systems and regulations. Addressing these issues will not only smooth financial flows but also unlock new avenues of growth for both regions. Some of the stats on the challenges of Sino-African Trade are:

  • The average cost of sending a cross-border payment from Africa to China is 7.5% of the transaction value. This is significantly higher than the global average of 3.8%.
  • The time it takes to process a cross-border payment from Africa to China can be up to 5 days. This is also significantly longer than the global average of 2 days.
  • The risk of fraud in cross-border payments from Africa to China is high. In 2021, there were over $1 billion in fraudulent cross-border payments from Africa to China.

Several other challenges persist too in the realm of business payments to China. 

These include:

  1. Banking Infrastructure: In some African countries, the banking infrastructure is still underdeveloped. This lack of a robust banking system creates significant issues in seamless transactions, leading to high transaction costs, lengthy payment delays, and sometimes, failed transactions.
  2. Regulatory Issues: Both China and individual African countries have their own unique set of trade regulations and these can pose significant risks like limits with large transactions.
  3. Fraud and Cybersecurity Risks: With digital payments becoming more common, there's an increased risk of fraud and cybersecurity threats. 

Overcoming these challenges necessitates improved financial infrastructure, increased regulatory cooperation, and more secure and accessible digital payment solutions. Both Chinese and African institutions will need to work together to make progress in these areas and foster a more conducive environment for business payments.

As the world moves towards greater financial inclusion and digitalization, it is clear that the potential for Sino-African trade and remittances is vast. The key lies in overcoming these hurdles and ensuring a safer, faster, and cost-effective system for cross-border payments.

How innovation can help Remittances and Business Payments 

The business payment & remittance challenges between China and Africa can be mitigated by leveraging various technological innovations. Here's a look at some potential strategies and technologies:

  1. Digital Payment Platforms: The development and adoption of digital payment platforms can significantly simplify cross-border transactions. 
  2. Support multiple currencies: A remittance platform should support multiple currencies to mitigate currency exchange risks with cyber security. 
  3. Mobile Money: Leveraging mobile money. The Platform should allow users to deposit, withdraw, and transfer money using their mobile devices.
  4. AI and Machine Learning: AI and Machine Learning can be employed to identify and prevent fraudulent transactions. 
  5. Fintech Partnerships: Collaboration between Chinese and African fintech companies can help develop solutions that address specific regional challenges and regulatory issues. 
  6. RegTech: Regulatory Technology (RegTech) can assist businesses by automating compliance, businesses can ensure they adhere to all relevant laws and regulations, reducing the risk of penalties and reputational damage.

Overcoming these challenges requires not only technological innovation but also supportive government policies, regulatory cooperation, and investment in digital infrastructure. This collaborative effort can help to unlock the full potential of the growing trade between Africa and China.

How RemittancesHub can help 

RemittancesHub is well-positioned to participate in the Sino-African trade and aims to become a major processor of business payments from Africa to China. The company has a strong track record of providing cross-border payment services and has a deep understanding of the African market. RemittancesHub is also committed to promoting economic development in Africa. With its innovative approach and its commitment to social impact, RemittancesHub has the potential to make a significant contribution to Sino-African trade.

Since RemittancesHub stands at the intersection of traditional African banking systems and innovative fintech on one side, and the CNY clearing systems on the other side, it is poised to redefine cross-border business payments between Africa and China. RemittancesHub aims to provide fast, easy and secure business payments from Africa to China, with transparent costs and end-to-end transaction tracking.

  1. Multi-currency Transactions: Collaborating with a network of banks and fintechs worldwide, RemittancesHub can enable transactions in multiple currencies. This means that businesses can send and receive funds in their preferred currency, eliminating the need for multiple conversions and thereby reducing costs.

  1. Faster Payments: international transactions can take up to 5 days to process via the legacy SWIFT network & system, but with it, all Digital Networks and access to local clearing, RemittancesHub reduces this to near real-time or same-day. This is critical in a fast-paced world where speedier payments can help businesses manage their cash flows & liquidity more efficiently.

  1. Enhanced Security: One of the main concerns in cross-border payments is security. Owing to its cutting-edge digital technology platform, RemittancesHub ensures robust security measures, thereby minimizing the risk of fraud.

  1. End-to-End Tracking: RemittancesHub can allow users to track their transactions every step of the way, giving them peace of mind knowing exactly where their money is at any given time. This level of transparency is often missing in traditional banking systems.

One of the major advantages that RemittancesHub holds is its ability to drastically reduce transaction times. By leveraging digital technology and access to local clearing systems in multiple countries, the typical five-day processing period for cross-border transactions can be dramatically shortened to the same or next-day delivery of funds to beneficiaries, thereby enhancing the speed of business operations and enabling more efficient cash flow operations for businesses.

RemittancesHub is well-positioned to become a major player in the evolving global financial landscape by delivering secure, efficient, and fast services. It can revolutionize the way businesses and individuals conduct cross-border transactions, thereby driving economic growth and financial inclusion.

The potential for Sino-African trade and remittances is, and overcoming the existing challenges in this space is crucial for unlocking it. A key player in this transformation is RemittancesHub, which aims to be a major processor of business payments from Africa to China. 

Amit Shrimali
Global Head – Sales & Business Development

Amit has gained experience in various industries for approximately 23-25 years - including Advertising, Dot Coms, Manufacturing Units, IT selling, and culminating Remittance.


Cross Border
Business Payments

445 Banks Road, Office No. 8
KELOWNA BC V1X 6A2, Canada

Download Brochure