AFRICA FINANCE IN BRIEF: Financial map shifts as growth meets new risks

The first two weeks of July have highlighted the forces reshaping Africa’s financial landscape. From the continent’s growing embrace of the Chinese yuan and Ethiopia’s sweeping banking reforms to Kenya’s resilient economic growth and East Africa’s rising appeal to investors, Africa is strengthening its long-term growth story even as renewed geopolitical tensions threaten the recovery.

Here are the stories shaping the week

More African nations embrace yuan as dollar dominance weakens

African economies are accelerating their use of China’s yuan for trade, debt servicing, foreign exchange reserves and cross-border payments, signalling one of the continent’s clearest moves yet to reduce reliance on the US dollar as China deepens its economic footprint across Africa.

Why it matters: The growing use of the yuan could lower transaction costs, ease pressure on scarce dollar reserves and reshape how African countries finance trade and manage debt. It also reflects China’s expanding influence in Africa’s financial system and the continent’s gradual move towards a more diversified monetary landscape.

Ethiopia scraps bank lending cap in major reform push

Ethiopia has removed annual lending limits on commercial banks, replacing one of its most significant post-reform controls with market-based monetary tools as authorities continue overhauling one of Africa’s last frontier banking markets.

Why it matters: The move marks another milestone in the financial liberalisation for the second most populated country in the continent and could unlock more private-sector credit ahead of the expected entry of foreign banks. It also signals growing confidence that inflation can be managed through conventional monetary policy rather than administrative controls.

Manufacturing, tourism lift East Africa’s biggest economy to three-year high

Kenya’s economy grew at its fastest first-quarter pace in three years as stronger manufacturing output, a tourism rebound and resilient construction activity offset global headwinds, reinforcing its position among Africa’s fastest-growing major economies.

Why it matters: A stronger Kenyan economy supports East Africa’s role as one of the continent’s fastest-growing regions, strengthening investor confidence and creating new opportunities for banks, manufacturers and infrastructure investors.

Kenya, Tanzania overtake South Africa in bank returns as investors look east

Kenya and Tanzania are delivering Africa’s strongest banking returns, outpacing South Africa and reinforcing East Africa’s emergence as the continent’s new banking growth frontier as lenders accelerate expansion across the region.

Why it matters: Higher shareholder returns are attracting fresh investment from Africa’s biggest banking groups, signalling that future growth opportunities are increasingly shifting towards East Africa’s rapidly expanding financial markets.

Africa’s business recovery enters second half under fresh oil shock

Africa’s private sector regained momentum in June as more economies returned to expansion. But the recovery is already facing a fresh test after Iran’s decision to close the Strait of Hormuz renewed fears of higher oil prices, rising inflation and weaker business activity.

Why it matters: A sustained disruption to global oil supplies could quickly reverse recent gains in business confidence, push up inflation and delay interest-rate cuts across many African economies, particularly those that depend heavily on imported fuel.

Chart of the Week