China’s leading social media and online payment platform, WeChat Pay, is set to launch in Kenya, in a move that will free traders from the need to buy dollars to settle transactions directly with their Chinese counterparts.
Pyxis, a financial technology company focusing on China-Africa cross-border payments, said it is finalizing a deal that would allow Kenyan traders to make transactions of up to $70,000 via WeChat Pay with their Chinese counterparts in a move that will be a major boost for traders importing goods from China.
Speaking on the sidelines of the 2024 China-Africa Digital Financial Inclusion Summit last week, Pyxis’ Chief Executive Officer, April Long, said that cross-border payment solutions would help individual traders pay for Chinese products since China remained the number one source of merchandise for African traders.
“Currently, to trade with China you need to go to a bank, convert your Kenya Shillings into dollars and send the dollars to the trader in China who has to go ask his bank to convert the dollars into Chinese Yuan,” Long said.
The cross-border payment solution presents a major boost for Kenyan traders, who will benefit from avoiding the often costly and slow process of traditional banking and money transfer systems. Long said that once launched, Pyxis’ platform will facilitate person-to-person money transfers between Kenya and China without the need for dollars, with plans in the future to extend this capability to business transactions.
Additionally, Kenya’s leading mobile operator Safaricom has indicated that it is working to create a link with Alipay, another major online payment platform in China, through its mobile payment solution M-Pesa through a product that will be structured to allow for the transfer of funds from an M-Pesa customer in Kenya to a beneficiary in China. Sylvia Mulinge, Safaricom’s chief customer officer said that the goal of this partnership is to develop a super app that offers customers financial services, shopping, merchant services, entertainment, and direct marketing.
The introduction of the e-commerce payment solution is expected to boost the growing trade between China and Africa which reached $282 billion last year.
Ji Min, director of the Counselor Office at the People’s Bank of China, said that the Chinese Yuan could play a bigger role in trade and cooperation between African countries and China, with opportunities for currency swaps and cross-border settlements.
Ji added that China is willing to export its financial inclusion model which saw the creation of fintech giants. He pointed out that Chinese authorities gave fintech companies the room to grow with a tolerant, open and supportive regulatory environment and this can also work for Africa.
“Africa could achieve similar success if countries accelerated digital financial inclusion through regulatory reforms that encouraged financing for small, medium and micro enterprises, as well as agribusiness,” Jin said.