How China Is Expanding the Yuan’s Footprint in Africa to Curb Dollar Dependence
China’s engagement with Africa is entering a new and strategic phase, one defined less by concrete and construction and more by currency and financial influence.
For decades, Beijing’s presence on the continent was symbolised by massive infrastructure projects: highways cutting across Kenya, modern rail networks in Ethiopia, and ports that reshaped Africa’s trade corridors. These investments positioned China as Africa’s leading development partner and helped cement deep economic ties.
Today, however, China’s focus is evolving. The emphasis is shifting from physical infrastructure to financial integration, with the Chinese yuan increasingly at the centre of this transformation.
Although the yuan currently represents less than 2% of global foreign exchange reserves, Africa is emerging as a key testing ground for Beijing’s ambition to internationalise its currency and reduce global reliance on the U.S. dollar. Rapidly expanding trade with China, the world’s largest exporter, has accelerated this shift. According to the People’s Bank of China, the yuan’s share in global trade finance has risen from 2% to approximately 7% over the past five years, driven in part by stronger commercial ties with developing economies, including those in Africa.
Across the continent, governments are now taking concrete steps that signal a growing acceptance of the yuan in trade, taxation, and debt management.
Zambia Accepts Mining Taxes in Yuan
In a landmark move, Zambia became the first African nation to officially accept the Chinese yuan for mining taxes and royalties. The Bank of Zambia confirmed that yuan-denominated payments began in October, with formal adoption announced in December.
The policy shift reflects Zambia’s close economic relationship with China, which is both the country’s largest buyer of copper and one of its most significant creditors. Chinese mining companies operating in Zambia are now settling part of their tax obligations in yuan, marking a notable departure from the traditional reliance on the U.S. dollar.
According to the central bank, the move aligns with Zambia’s broader reserve-management strategy and mirrors the realities of its export markets, where China plays a dominant role.
Kenya Converts Dollar Debt to Yuan
Kenya has also embraced the yuan as a tool for easing fiscal pressure. In October, the East African nation converted a portion of its Chinese debt from U.S. dollars into yuan, restructuring part of its $5 billion railway loan from the Export-Import Bank of China.
The shift is expected to deliver significant financial relief, with estimates suggesting annual savings of about $250 million. By reducing exposure to dollar volatility and rising global interest rates, Kenya aims to stabilise its debt-servicing costs while deepening financial cooperation with Beijing.
Ethiopia Explores Yuan Conversion for Dollar Debt
Ethiopia is following a similar path. In October, the government began discussions with China on converting part of its U.S. dollar-denominated debt into yuan. The country is considering switching a portion of the $5.38 billion it owes China into the Chinese currency, according to IMF data.
Since declaring a sovereign default in 2023, Ethiopia has been engaged in negotiations to restructure more than $15 billion in external debt. The potential yuan conversion forms part of a broader strategy to manage debt more sustainably and shield the economy from dollar fluctuations amid ongoing financial strain.
Read also China, Canada Seek Deeper Dialogue and Cooperation Amid Global Trade Uncertainty
As more African economies turn to the yuan for trade, taxation, and debt restructuring, China’s currency is steadily gaining ground on the continent. While the dollar remains dominant globally, these developments signal a gradual but deliberate shift, one that could reshape Africa’s financial architecture and strengthen China’s influence in the global monetary system.
