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. The shift marks one of the continent’s clearest moves yet to reduce dependence on the US dollar as governments grapple with persistent dollar shortages and deepen financial ties with Beijing.

An increasing number of African economies—including Angola, Zambia, Kenya, Nigeria, Egypt, and Ethiopia—are adopting yuan-based financing and settlement arrangements as China strengthens its position as Africa’s largest trading partner and a leading source of infrastructure finance.

The yuan’s rise across the continent has surged since 2023, gathering pace through 2025 and the first half of this year. What began with bilateral currency swaps and isolated trade-settlement agreements has evolved into a broader effort to use the Chinese currency for trade, reserves, debt servicing and cross-border payments.

The transition forms part of a broader de-dollarisation trend gathering pace across Africa and other emerging markets as governments seek to reduce exposure to exchange-rate volatility, ease pressure on scarce dollar reserves and lower the cost of international trade and debt servicing.

Last month, China reinforced that momentum by authorising Standard Bank and the Industrial and Commercial Bank of China (ICBC) to jointly operate a yuan-clearing network covering 19 African countries, giving businesses direct access to China’s domestic payment infrastructure without routing transactions through the dollar.

Beyond countries already using the yuan for trade, debt servicing or reserve management, several other African economies are exploring similar arrangements as they seek cheaper financing, stronger trade links with China and greater protection against recurring dollar shortages. The expansion of the clearing network is expected to accelerate that transition by making yuan transactions more accessible across the continent.

Although the US dollar remains the world’s dominant reserve and trade currency, African governments are increasingly diversifying their financing and settlement options to reflect the continent’s expanding commercial ties with China and reduce reliance on hard-to-source dollars.

Angola expands yuan role in reserves

Angola become the latest African country to deepen its use of the yuan after the Bank of Angola last week added the Chinese currency to the list of foreign currencies commercial banks can use to meet mandatory reserve requirements alongside the US dollar, euro, and South African rand.

The decision is particularly significant for Africa’s third largest oil producer, which has borrowed billions of dollars from Chinese lenders to finance infrastructure projects backed by future oil exports.

Kenya, Zambia broaden yuan use

Last October, Kenya expanded its use of the yuan by converting part of its debt owed to China’s Export-Import Bank into the Chinese currency. The restructuring of part of the country’s roughly $5 billion Standard Gauge Railway loan is expected to save Nairobi $250 million annually by reducing exchange-rate costs and easing pressure on dollar reserves.

East Africa’s largest economy has increasingly turned to alternative financing structures as it seeks to reduce debt-servicing costs, improve foreign exchange management and strengthen trade links with its largest bilateral lender.

Zambia, Africa’s second-largest copper producer, that same month became the first country on the continent to officially accept mining taxes and royalties in yuan after the Bank of Zambia approved local-currency settlements for Chinese mining companies.

The move reflects China’s dominant role in Zambia’s mining industry and coincides with a sharp recovery in the kwacha, one of Africa’s best-performing currencies over the past year.

Nigeria, Egypt and Ethiopia deepen financial ties

Nigeria, Africa’s most populous nation, continues to operate a bilateral currency swap agreement with China, allowing businesses to settle transactions directly in naira and yuan without first converting into dollars. The arrangement is designed to facilitate trade, conserve foreign exchange reserves and reduce demand for dollars in one of Africa’s largest import markets.

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Egypt, North Africa’s largest economy, has intensified discussions with China on settling bilateral trade in local currencies while expanding access to yuan-denominated financing as part of broader efforts to diversify funding sources and manage external debt.

Meanwhile, Ethiopia, Africa’s second-most populous country and one of its fastest-growing economies, is exploring yuan-based financing arrangements following the liberalisation of its financial sector. Officials are examining options that would allow a greater share of the country’s obligations to Chinese lenders to be serviced in yuan rather than dollars.

Analysts say the growing use of the yuan offers clear advantages for African economies facing recurring dollar shortages. Settling trade and debt obligations directly in yuan can reduce transaction costs, improve access to foreign exchange and lower debt-servicing expenses, particularly for countries with significant borrowing from Chinese institutions or large trade flows with China.

However, there are cautions that the shift is not without risks. Unlike the dollar, the yuan is not fully convertible and remains subject to significant policy control by Beijing. Greater reliance on the Chinese currency could reduce exposure to the dollar while increasing dependence on China’s financial system and policy decisions.

For now, the direction of travel is becoming increasingly clear. As trade with China expands and more African economies adopt yuan-based financing, the Chinese currency is evolving beyond a settlement tool into an increasingly important component of Africa’s financial architecture. While the US dollar remains dominant, Africa’s monetary landscape is becoming progressively more diversified.