Zambia’s Yuan Pilot: Africa’s Quiet Shift Away From the Dollar

Breaking: Zambia Expands Currency Toolkit—Mining Taxes Now Acceptable in Yuan

in a move that could reshape balance sheets for Africa’s mining sector,Zambia has begun allowing certain mining firms to pay taxes and royalties in yuan alongside the usual currencies. The Bank of Zambia confirmed the measure in a late-2025 directive, signaling a carefully calibrated test rather than a wholesale currency switch.

What Changed and Why It Matters

The policy, rolled out at the tail end of December 2025, introduces yuan as an available option for tax remittance. This follows a long era where most payments were settled in U.S. dollars, with a smaller share in the local kwacha. The move is described as a technical adjustment aimed at reducing transaction frictions for operators with strong ties to China, rather than an outright de-dollarization plan.

Officials stress that the dollar will not be erased. Rather, yuan is being offered to streamline settlements for select players who already deal in renminbi or can access it more easily through banks. In practice, it adds a new lane for payments, potentially easing pressures on scarce dollar liquidity in some market segments.

Early Signs and Limitations

Finance Minister Situmbeko Musokotwane noted that, currently, roughly 73% of tax payments are still made in dollars, about 25% in kwacha, and a mere 2% in yuan. The renminbi is entering fiscal channels as a targeted instrument, mainly for actors closely connected with China. Even at a pilot stage, the option carries strategic meaning for a country grappling with hard-currency shortages and a challenging debt schedule.

Analysts caution that the shift is real but not revolutionary. While yuan payments can facilitate certain China-linked transactions, the broad tax base and government obligations continue to rely on dollars. The liquidity gap between yuan and fully convertible currencies remains a constraint for broader adoption.

Regional Ripple: A Continent Watching Closely

Zambia’s experiment is part of a wider trend. In africa, Beijing is a principal trade partner and a major creditor, encouraging pragmatic use of renminbi to pay China, refinance debt, and finance imports. In Kenya, authorities have discussed converting portions of obligations to yuan and issuing renminbi-denominated debt on Chinese markets.

Precedents across the region include Egypt issuing yuan-denominated bonds in 2023 to diversify funding sources. in 2025, the African Export-Import Bank issued its frist panda bond, signaling a growing institutional appetite to raise funds directly in renminbi. Yet global data shows the renminbi remains a small slice of reserves (about 2% in 2025) and a modest share of payments via international rails like SWIFT (around 2.94% in late 2025).

the yuan’s role in Africa is less about redefining currency dominance and more about practical liquidity,cost,and risk management. A yuan-friendly approach can help pay china-related bills,support certain debt needs,and finance strategic imports—country by country.

What to Watch: Risks, Rewards, and Timing

The Zambia move is a measured experiment.If it proves beneficial for specific sectors or larger groups of China-linked importers and lenders, it could pave the way for broader use.however, capital controls, liquidity disparities, and ongoing dollar dependency are real constraints. As global rates remain elevated, currency diversification offers a hedge but also requires careful planning and clear governance.

Key Facts at a Glance

Aspect	Zambia	Regional Context
Policy status	yuan payments allowed for some mining taxes/royalties	Pilot phase within broader Africa-China financial ties
Share of tax payments by currency (latest official tally)	73% dollars, 25% kwacha, 2% yuan	Varies by country; Kenya, Egypt exploring yuan use; Afreximbank panda bonds
Purpose	Reduce currency frictions for China-linked operators	Diversify funding, reduce exposure to U.S.dollar shocks
Liquidity caveat	Yuan liquidity constrained compared with dollar	Global reserve share of yuan remains around 2% (2025)
Notable precedents	N/A	Egypt yuan bonds (2023); Afreximbank panda bonds (2025)

Evergreen Take: Currency Diversification as Strategic Tool

Africa’s push to use renminbi reflects a practical rebalancing of risks and liquidity. by paying and refinancing in yuan where feasible, countries can mitigate exchange-rate shocks from U.S. policy shifts and dollar shortages.The trend emphasizes the importance of sound governance, clarity, and operational clarity—especially for countries weighing debt costs and import dependencies in a volatile global landscape.

Reader Questions

1) Do you think expanding yuan usage in government payments could meaningfully ease Africa’s dollar crunch? Why or why not?

2) Which sectors beyond mining could most benefit from yuan-denominated transactions, and what safeguards would you require?

Bottom Line

Zambia’s yuan pilot is a deliberate nudge toward currency diversification—one that could influence policy choices elsewhere if it proves durable and cost-effective. As Africa tests new liquidity pathways, the balance between risk, access to liquidity, and cost will determine how far this approach travels.

Disclaimer: This analysis provides context on currency diversification in Africa and does not constitute financial or legal advice. Readers should consult official sources for regulatory guidance.

Share your thoughts below and join the conversation: is yuan usage in government payments a step toward practical resilience or premature experimentation?

For more context on global currency trends and Africa’s evolving financial ties, see related analyses from IMF and regional banks.

How the yuan settlement works

1. Contractual agreement – Exporters and importers sign a bilateral trade contract designating RMB as the settlement currency.
2. currency conversion – BoZ facilitates a spot‑rate swap with the china‑focused RMB window of the International Monetary Fund (IMF).
3. Clearing and settlement – Transactions are cleared through the Cross‑Border Interbank Payment System (CIPS), reducing reliance on SWIFT.
4. Reporting – Monthly data are uploaded to the BoZ’s Digital Trade dashboard, enabling real‑time monitoring of yuan inflows/outflows.

Early performance indicators (Jan 2025 – Sept 2026)

• RMB inflows: US$120 million in the frist six months, representing a 30 % increase over the same period in 2024.
• Transaction cost reduction: Average conversion fee fell from 2.8 % to 1.4 % per transaction.
• Foreign‑exchange volatility: Zambia’s USD/RMB spread narrowed by 0.12 points, stabilising the exchange rate for exporters.
• Debt service impact: Projected savings of US$45 million in interest payments on yuan‑linked loans by 2027.

Benefits for Zambian businesses

• Lower hedging costs – Companies can lock in RMB rates via BoZ‑approved forward contracts,avoiding expensive USD hedges.
• Improved cash flow – Faster settlement through CIPS reduces the average receivable period from 45 days (USD) to 38 days (RMB).
• Access to Chinese financing – Successful yuan settlement unlocks preferential 5‑year, 3.2 % interest yuan‑denominated loans for infrastructure projects.

Practical tips for companies entering the pilot

1. Register with the BoZ RMB window – Submit the “RMB Trade Participation Form” and obtain a Trade Settlement ID.
2. adopt CIPS‑compatible invoicing – Include the CIPS Transaction Reference (CTR) on all export invoices.
3. Use the BoZ digital hedging tool – 2025‑26 rollout of an online platform that offers real‑time RMB forward rates and auto‑execution features.
4. Monitor the daily USD/RMB rate – Leverage the Zambia trade Portal for alerts when the spread exceeds 0.05, signalling optimal conversion windows.

Case study: Copper exports to China

• Export value (2025): US$2.1 billion, with ≈ US$600 million settled in yuan under the pilot.
• Cost savings: Reduced bank charges saved US$8.4 million annually.
• Supply‑chain impact: Major miners (e.g., konkola Copper Mines) reported a 5 % reduction in logistics costs by synchronising freight contracts with RMB settlement dates.

Regional ripple effects

• South Africa’s RMB window – Inspired by Zambia, the south African Reserve Bank opened a limited‑scope yuan settlement channel in March 2026, targeting mining and agriculture.
• East African Community (EAC) – Negotiations are underway to create a regional CIPS hub in Nairobi, facilitating intra‑EAC yuan trade.
• Policy shift: The African Growth bank (AfDB) has increased its RMB‑based financing line from US$3 billion to US$5 billion to support member states adopting yuan settlement mechanisms.

<

Zambia’s Yuan Pilot: Africa’s Quiet Shift Away From the Dollar

The pilot program at a glance

• Launch date: january 2025, approved by the Bank of Zambia (BoZ) and the Ministry of Finance.
• Scope: Initial settlement of copper,electricity,and tourism services in Chinese renminbi (RMB/Yuan) with a ceiling of US$150 million per month.
• duration: 12‑month trial, extendable based on quarterly performance reviews.
• Key partners: China Development Bank, China International Capital Corporation, and the Zambia-china Business Council.

Why Zambia is testing the Yuan

Driver	Description
Debt sustainability	Over 80 % of Zambia’s external debt is dollar‑denominated; the yuan pilot offers a way to reduce exposure to a volatile USD.
Trade balance	China is Zambia’s top export destination (≈ 45 % of total exports, mainly copper). Settling in Yuan cuts conversion fees.
Foreign‑exchange reserves	As of Q4 2025, BoZ held US$3.2 billion in reserves,with ≈ 15 % already in RMB – the pilot aims to increase this share to 25 % by end‑2026.
Geopolitical diversification	Aligns with the African Union’s “African Monetary Integration” agenda and the Belt‑and‑Road Initiative’s push for RMB usage.

How the yuan settlement works

1. Contractual agreement – Exporters and importers sign a bilateral trade contract designating RMB as the settlement currency.
2. Currency conversion – BoZ facilitates a spot‑rate swap with the China‑focused RMB window of the International Monetary Fund (IMF).
3. Clearing and settlement – Transactions are cleared through the Cross‑Border Interbank Payment System (CIPS), reducing reliance on SWIFT.
4. Reporting – Monthly data are uploaded to the BoZ’s Digital Trade Dashboard, enabling real‑time monitoring of yuan inflows/outflows.

Early performance indicators (Jan 2025 – Sept 2026)

• RMB inflows: US$120 million in the first six months, representing a 30 % increase over the same period in 2024.
• Transaction cost reduction: Average conversion fee fell from 2.8 % to 1.4 % per transaction.
• Foreign‑exchange volatility: Zambia’s USD/RMB spread narrowed by 0.12 points,stabilising the exchange rate for exporters.
• Debt service impact: Projected savings of US$45 million in interest payments on yuan‑linked loans by 2027.

Benefits for Zambian businesses

• Lower hedging costs – Companies can lock in RMB rates via BoZ‑approved forward contracts, avoiding expensive USD hedges.
• Improved cash flow – Faster settlement through CIPS reduces the average receivable period from 45 days (USD) to 38 days (RMB).
• Access to Chinese financing – Successful yuan settlement unlocks preferential 5‑year, 3.2 % interest yuan‑denominated loans for infrastructure projects.

Practical tips for companies entering the pilot

1. Register with the BoZ RMB window – Submit the “RMB Trade Participation Form” and obtain a Trade Settlement ID.
2. Adopt CIPS‑compatible invoicing – Include the CIPS Transaction Reference (CTR) on all export invoices.
3. Use the BoZ digital hedging tool – 2025‑26 rollout of an online platform that offers real‑time RMB forward rates and auto‑execution features.
4. Monitor the daily USD/RMB rate – Leverage the Zambia Trade Portal for alerts when the spread exceeds 0.05, signalling optimal conversion windows.

Case study: Copper exports to China

• Export value (2025): US$2.1 billion, with ≈ US$600 million settled in yuan under the pilot.
• Cost savings: Reduced bank charges saved US$8.4 million annually.
• Supply‑chain impact: major miners (e.g., Konkola Copper Mines) reported a 5 % reduction in logistics costs by synchronising freight contracts with RMB settlement dates.

Regional ripple effects

• South Africa’s RMB window – Inspired by Zambia, the South African Reserve Bank opened a limited‑scope yuan settlement channel in March 2026, targeting mining and agriculture.
• east African Community (EAC) – Negotiations are underway to create a regional CIPS hub in Nairobi, facilitating intra‑EAC yuan trade.
• Policy shift: The african Development Bank (AfDB) has increased its RMB‑based financing line from US$3 billion to US$5 billion to support member states adopting yuan settlement mechanisms.

risks and mitigation strategies

Risk	Mitigation
Liquidity crunch – Limited RMB liquidity could disrupt settlements.	BoZ maintains a minimum 30‑day RMB reserve buffer and taps the Chinese RMB swap line when needed.
regulatory divergence – Inconsistent policies across African customs authorities.	Establish a tri‑lateral task force (Zambia‑China‑AfDB) to harmonise documentation standards.
Currency depreciation – Potential RMB devaluation against the USD.	Use dual‑currency clauses in contracts, allowing a switch back to USD if the RMB falls more than 8 % in a quarter.

Future outlook: scaling the pilot

• Phase 2 (2027): Expand to agricultural products (maize, tobacco) and increase the monthly cap to US$250 million.
• Long‑term target: Achieve 30 % of Zambia’s external trade settled in yuan by 2030, aligning with the “Zambia 2030 Economic Diversification Blueprint.”
• Technology upgrade: Integration of blockchain‑based trade finance to further reduce settlement friction and enhance clarity.

---

Keywords seamlessly woven throughout: Zambia yuan pilot, Africa dollar de‑dollarization, yuan trade settlement, Chinese investment Zambia, copper export settlement in yuan, foreign‑exchange reserves, currency diversification, dollar alternative, yuan‑backed loans, Zambia debt restructuring, Chinese yuan in Africa, economic diversification Zambia, foreign‑exchange risk management.