Yuan Gains Momentum in Africa Amid Dollar Challenges
Ethiopia and Kenya made history this month by finalizing Africa’s first yuan-based debt-swap agreements, a strategic shift to reduce reliance on U.S. dollars and curb mounting repayment costs. This development underscores the Chinese currency’s expanding role in reshaping Africa’s financial landscape.
Economic Pragmatism Drives Shift
Professor XN Iraki of the University of Nairobi called the move “a logical step” for debt-burdened economies.
“Yuan loans offer lower interest rates than dollar-denominated debt. For Kenya, this directly eases fiscal pressure,”
he explained, noting that 2025 has seen a 17% year-on-year increase in China-Africa trade settlements using yuan.
Trade Efficiency Fuels Adoption
Beyond debt restructuring, businesses and travelers stand to benefit. Professor Iraki highlighted cumbersome currency conversions during a recent Beijing trip:
“Direct shilling-to-yuan transactions would save time and costs. Traders need this flexibility as bilateral commerce grows.”
Systemic Support Strengthens Trust
Zhou Mi, a senior Chinese trade researcher, emphasized infrastructure enabling this shift:
“The Cross-border Interbank Payment System (CIPS) now connects 1,600 institutions globally. It’s not about replacing SWIFT but providing reliable alternatives.”
With China waiving tariffs for 53 African nations, yuan usage is projected to rise 22% by 2026.
Redefining Global Financial Dynamics
Analysts observe that Africa’s yuan embrace reflects broader de-dollarization trends and China’s growing economic diplomacy. As bilateral trade approaches $300 billion this year, the currency shift signals Africa’s strategic balancing in a multipolar financial system.
