Introduction

African–Chinese trade is enormous. In 2024, China’s trade with Africa reached $295.56 billion, a 4.8% increase from the previous year. This trade value was driven by Chinese exports to Africa ($178.76 billion) and African imports to China ($116.79 billion), so many importers, e-commerce firms, and manufacturers regularly send payments to China. Staying compliant while sending money to China means meeting your home country’s rules and China’s requirements. In practice, this involves careful documentation, strict AML/KYC checks, and using approved payment channels.

In this blog post,  we outline the key rules and best practices. Our goal is an accessible guide for business owners in Nigeria, Kenya, South Africa, Ghana, and beyond.

1. Regulatory and AML Compliance

Most African countries tightly regulate foreign exchange (FX) to prevent fraud and money laundering. Banks and money dealers must verify every cross-border payment and report large or suspicious transactions. For example, Kenyan law requires any importer to purchase U.S. dollars from an authorized bank and present a proforma invoice and customs entry form when paying a Chinese supplier. Similarly, South African banks must file International Funds Transfer Reports (IFTRs) for transfers above the threshold (currently ~R20,000 equivalent of $1,098.91. In practice, this means: before sending funds, ensure your bank has all supporting documents (sales invoices, shipping forms, import licenses, etc.) and that you’ve cleared any local foreign exchange approvals. 

China also has strict AML rules. Its new Anti-Money Laundering Law (effective Jan 2025) strengthens reporting and due diligence requirements for financial institutions. In other words, Chinese banks will also examine incoming payments closely. Always use reputable banks or payment platforms to send funds, and provide clear business invoices so that the Chinese side can justify the transaction to their regulators.

Key point: Comply with AML/KYC at home and in China. Banks will ask for identity documents, invoices, and customs paperwork. If you bypass formal channels (e.g., sending cash or mislabeling transfers), you risk delays or even bans. For example, in 2021, Nigerian authorities barred several firms from the FX market for submitting inadequate import documents, leaving them unable to pay for new imports through official channels.

2. Documentation

Keep records of every trade invoice, bill of lading, import permit, tax certificate, and other paperwork. When remitting, your bank may need to see these to process the payment. In Nigeria, the bank will check that a Form M (import authorization) was correctly processed before releasing dollars. In Kenya, banks typically retain the Import Declaration Form (IDF) and customs clearance paperwork for large payments. Maintain digital and hard-copy records of these for at least 5 years regulators can audit foreign payments retroactively.

3. AML checks 

Any large or unusual transfer can trigger anti-money laundering alerts. African banks have implemented FATF-style standards: they monitor flows of funds, flag unusual patterns, and report them to financial intelligence units. Chinese banks do the same on their end. To minimize problems, always match invoice amounts exactly, avoid round-number transfers that might look like structuring, and make sure names on accounts and invoices match.

4. Certification and screening

Where relevant, get tax clearance or licenses for foreign payments. For instance, Nigeria requires companies to obtain a tax clearance certificate before remitting royalties, interest, or service fees abroad. Similarly, South Africa’s Financial Intelligence Centre Act (FICA) requires that any payment above the threshold be reported, so your bank will collect your ID and company details for transfers. Always work through an authorized dealer (a licensed bank or forex bureau), which will handle these checks.

5. Tax Implications and Reporting

Payments to China can have tax consequences both at home and in China. Here are the main issues to watch:

1. Import VAT and duties: When you pay a Chinese supplier for goods, factor in local taxes. For example, in South Africa and Kenya, you will owe import VAT and customs duties on the received shipment value. Keep your invoices and customs entries handy so you can claim input VAT credits and deduct costs. For example, in South Africa, import VAT is generally claimable once the duties are paid. In Nigeria and Ghana, import duties may have been paid at the port. In all cases, keep proof of payment.

2. Withholding taxes: If you pay a Chinese entity for services, royalties, or technical fees, check for any withholding tax (WHT). Many African countries require you to deduct WHT when paying non-residents (e.g., Nigeria normally withholds 5–10% on royalties or service fees) and send the remainder to the vendor. Often, a tax treaty with China reduces these rates. For example, Nigeria’s tax rules state you must get approval from the National Office for Technology Acquisition to pay tech fees abroad and obtain tax clearance. If you fail to withhold correctly, your company could face penalties back home.

3. Foreign exchange documentation for tax: Some countries require declarations to their tax or exchange authorities for large foreign payments. In Kenya, foreign exchange dealers keep copies of invoices, IDF, and customs forms for transactions over US$10,000. In Nigeria, banks report any foreign transfer above USD 10,000 to the Central Bank. In South Africa, electronic cross-border transfers above a modest threshold (around R20,000) are reported to the Financial Intelligence Center. While these are mainly for AML, having these reports in order also satisfies auditors that your taxes on imports are correctly handled.

4. Chinese tax reporting: In most cases, the Chinese exporter will declare and pay China’s export VAT/duty, so the invoice you receive covers that cost. If you have a local subsidiary or representative office in China, ensure you comply with Chinese tax filings (e.g., corporate tax on any sales, value-added tax on imports). For pure trade transactions, it’s usually enough to treat the payment as an import cost in your accounting. Double-tax treaties between many African countries and China (for example, a Nigeria–China treaty) mean that you generally avoid being taxed twice on the same income. When in doubt, consult a tax advisor familiar with China–Africa trade.

Choosing the right payment channel is critical. Below are the main options, with their pros and cons:

1. SWIFT Bank Transfers (Traditional Banks)

Most common for large corporate payments. You wire money in USD (or EUR/RMB) from your bank to the Chinese supplier’s bank via the SWIFT network.

• Pros: Very secure, high transfer limits, widely accepted by Chinese firms.
• Cons: High fees (often 2–7% of the amount) plus correspondent bank charges. Slower (settlement usually 2–5 business days). Banks will perform full compliance checks. 

For example, sending $10,000 via a traditional bank might cost $350–$700 in fees and take about a week. Use SWIFT for well-established trade relationships and large orders, and make sure to fill in the SWIFT payment reference with your invoice number so the recipient can easily reconcile it.

2. Fintech Payment Platforms

    

New digital platforms are transforming cross-border payments in Africa. Companies like Flutterwave, Paystack, WorldRemit, Yogupay, and others offer cross-border transfers that can be faster and cheaper for businesses. These platforms often have APIs for e-commerce and support local mobile money or card payments.

•  Pros: Lower fees (often under 3% compared to banks’ 5–7%) and faster settlement (1–3 days). Many integrate directly with local bank accounts or mobile wallets. 
• Cons: Lower maximum limits on single transfers; sometimes require both sender and receiver to have accounts on the platform. They still perform KYC/AML, so you’ll need to provide business documents. Many are great for trade between Africa and Nigeria, Ghana, South Africa, etc. However, reaching Chinese banks can be tricky; often, these platforms will pay into an intermediary USD account or use local currency networks, so check that your Chinese supplier can receive funds (some may prefer SWIFT or local RMB transfers).

3. Blockchain and Cryptocurrencies

 A few businesses consider using stablecoins (like USDC) or crypto rails for payments. Blockchain can offer very fast, low-cost transfers and “reduces dependency on correspondent banks”. In theory, you could buy USDC in Nairobi, and the Chinese vendor redeems it in Shanghai. 

• Pros: 24/7 settlement, and stablecoins avoid fiat volatility. 
• Cons: High risk and regulatory uncertainty. African regulators may not recognize crypto as legal tender. For example, Nigeria only recently (Dec 2023) allowed banks to handle licensed crypto exchanges, but still regulates them heavily. Ghana is finalizing crypto rules. In China, however, crypto trading is outright banned; your Chinese partner cannot legally accept Bitcoin or other tokens for payment. Even stablecoins face scrutiny.

• Bottom line: Crypto is generally not recommended for paying Chinese suppliers, since China prohibits crypto settlements, and many African banks remain cautious. If you explore this, do so only with fully licensed crypto providers and full documentation (know-your-supplier, exchange control licenses, etc.).

4. Letters of Credit (LCs) and Trade Finance

While not a “channel” per se, trade finance instruments can ease compliance. An LC issued by your bank guarantees payment to the Chinese exporter upon presentation of the correct documents (commercial invoice, bill of lading, etc.). This aligns with FX compliance because the bank releases funds only when the goods are shipped and paperwork is in order. 

• Pros: Builds trust on both sides, and banks handle much of the regulatory checking. 
• Cons: Banks charge LC issuance fees, and the process is more bureaucratic. Use LCs for large shipments or new suppliers to ensure safety.

Practical Tips to Minimize Delays and Risks

1. Plan with Documentation: Start the process early. Get your proforma invoice and any needed permits (import licenses, health permits, etc.) from the Chinese supplier well before payment. Provide these to your bank in advance so the FX application can be approved on time. In Kenya, for instance, banks may make an “advance payment” if you promise to submit import documents after shipment. In Nigeria, failing to submit the full paperwork can block future FX approval. A best practice is to submit a complete FX request package to your bank (invoice, customs forms, proof of tax status, etc.) and follow up, as recommended by trade advisors.

2. Verify Payee and Purpose: Make sure the beneficiary’s bank account details are correct (name, SWIFT code, account number). Double-check any last-minute changes by phone or email with the supplier. Unfortunately, fraudsters sometimes hack emails and change payment instructions. Confirm via a trusted channel (like a recorded voice call) before sending large sums. Also, explain the purpose in the payment description (e.g., “Shipped goods Invoice #12345”) so banks on both sides understand why money is moving.

3. Use Official Exchange Rates: Obtain foreign currency through authorized banks at the official rate. Avoid black-market forex, which is illegal and can lead to prosecution. If your currency is weak or volatile, consider partial pre-payments or foreign currency accounts if possible (some banks let companies hold USD/EUR accounts).

4. Check for Dual-Reporting Requirements: Remember that you may need to report the transaction in both countries. For example, as noted above, Nigerian dealers report USD transfers above $10k to the CBN, and South African institutions file IFTRs above R20k. Also, maintain records for your tax filings at home (showing the expense or import value).

4. Choose the Right Partner: Work with financial institutions experienced in Africa–China trade. Some banks specialize in certain corridors (for instance, Standard Bank has strong China desks for South African clients). Fintechs like those listed above often have customer support that can guide you through documentation. For example, some platforms will alert you if a required document is missing. The key is a partner who understands the regulations in your country and China.

6. Monitor Policy Changes: Exchange control rules can change suddenly (especially during economic crises). Always check the central bank website or trade advisories before transacting. For instance, Ghana’s Bank of Ghana periodically issues updates on advance import payments or diaspora FX certificates. Subscribing to a newsletter from your central bank or a trusted fintech can help you catch changes (Yogupay and others offer real-time FX policy alerts, for example).

7. Stay AML-Compliant: Maintain strong internal compliance. That means screening Chinese counterparts (and any intermediaries) against sanction lists and known financial crime databases. Even if the Chinese firm is legitimate, always verify it formally (e.g., obtain business registration, confirm tax ID). Also, consider asking your supplier for an audited balance sheet or trade references if the amount is very large.

Country-by-Country Highlights

1. Nigeria 

Nigeria has one of the strictest FX regimes. Importers must obtain a Form M from the Nigerian Export Promotion Council (NEPC) and deposit it with the bank before any payment. Banks will verify that the Form M is in order (tied to a valid transaction) before releasing FX. Recent Central Bank of Nigeria CBN rules also require all overseas payments (above small values) to go through registered International Money Transfer Operators (IMTOs) or banks, and fintech IMTOs must report suspicious splitting of payments.

Keep in mind that officially, any transfer above USD 10,000 must be reported to the Central Bank, and under the Finance Act 2022, capital gains on digital assets (including crypto) are taxed, so involve accountants early if using new payment methods. Also note that some Nigerian banks still apply an extra 5% “ethanol levy” on import FX (check current banking circulars).

Tax side: Nigeria requires tax clearance to remit royalties or technical fees overseas. Check for any double tax treaty relief with China for service payments.

Tip: Due to Naira scarcity, FX allocations can be delayed. It’s wise to negotiate payment terms (e.g., 60% advance, 40% on delivery) or consider a letter of credit.

2. Kenya 

Kenya eliminated FX controls long ago, making it relatively easy to buy foreign currency. Kenyan importers still need to produce import documents to clear customs, but there is no central bank approval for routine trade payments. The Central Bank of Kenya requires authorized dealers to keep import documentation (IDF, invoice, etc.) for audits. There are no limits on sending money to China, but you do need a properly completed Import Declaration Form (IDF) for every shipment (unless exempt), and declare all goods to the Kenya Revenue Authority.

Payment channels in Kenya are plentiful. Mobile-money platforms like M-Pesa can even be integrated via services like WorldRemit. Leading fintechs (Flutterwave, Yogupay) operate in Kenya, often with multi-currency wallets and APIs for online stores.

Tip: Kenyan firms often pre-fund suppliers via flexible tools like Nilos or mobile money rails. Still, keep full invoices and customs clearance on file for your VAT claims and compliance records.

3. South Africa

 South Africa is one of the most open markets. There are no formal FX controls on current account (trade) transactions – you can buy and send any amount of foreign currency through your bank at the best rate available. The South African Reserve Bank does not require pre-approval for exports or imports. However, all banks must report large cross-border transactions to the Financial Intelligence Centre. In fact, since Feb 2023, South African banks file an IFTR (International Funds Transfer Report) for payments out of or into SA above R20,000

On the tax side, include import costs in your customs declarations (if not already paid abroad). Import VAT and duties are paid at customs; keep those receipts. If you are paying for services or royalties to a Chinese non-resident, withhold the local tax (e.g., 15% on royalties) unless a treaty applies. South Africa has a DTAA with China, which may reduce withholding taxes on royalties or interest; consult SARS guidelines.

Tip: Use your local large banks (Standard Bank, Absa, FNB), which have RMB-clearing capabilities. This can speed up payments if the Chinese supplier agrees to receive RMB. Also, ensure your ERP/accounting system properly accounts for any fluctuations in the USD/ZAR exchange rate between invoicing and payment.

4. Ghana

 Ghana’s Bank of Ghana (BoG) exercises strict FX oversight. In general, you must use an authorized dealer bank for all foreign payments and cannot deal directly. The BoG’s Foreign Exchange Act prohibits businesses from making payments in foreign currency

without prior approval. In practice, Ghanaian importers buy dollars through their bank, which will require import documents and an application. For exporters, 90% of foreign receipts must be repatriated and sold to the BoG (with the remaining 10% held in foreign currency).

Taxwise, Ghana imposes import duties and VAT at clearance; these should be documented on the invoices. WHT rules are similar to other African countries (e.g., 8–10% on royalties, services), unless a treaty with China says otherwise. Ghana and China do have a tax treaty (double taxation agreement) that may reduce such taxes.

Tip: The currency (Ghana cedi) can be volatile. Consider invoicing large purchases in USD or EUR if your supplier agrees. Also monitor any BoG announcements (they regularly issue directives on “advance payments” for imports, requiring 10–15% payment upfront and the rest after shipment). Having a good relationship manager at your bank (who knows the BoG rules) can greatly smooth the process.

Conclusion

Sending money to China from Africa involves navigating both countries’ rules. The good news is that the process is well-established: just be thorough with paperwork and use trusted payment methods. Always register transactions with your bank (they will ensure AML/KYC compliance), pay any required local taxes, and keep documents on hand. Use bank transfers for security, consider fintech platforms for cost savings, but be wary of crypto.

Plan: submit your import documentation early, follow up with the bank, and monitor any FX policy updates. By staying informed and organized, African businesses can maintain smooth, compliant payments to China, keeping supply chains flowing without legal headaches.