#FirstpostAfrica: Zambia, Kenya, and Ethiopia Choosing Yuan Over Dollar Beijing is evolving its strategy in Africa, moving beyond traditional infrastructure projects such as roads and ports to assert financial dominance through currency. In a major shift, Zambia has become the first African nation to allow mining companies to pay taxes in Chinese yuan, a strategic move driven by its status as a major copper producer and China’s role as its largest buyer. This trend is gaining momentum, with Kenya restructuring railway loans into yuan to save costs and Ethiopia entering similar discussions regarding its debt. This financial pivot comes as China and African nations seek to reduce reliance on the US financial system amid rising trade tensions and tariffs under the Trump administration. While the yuan currently comprises a small fraction of global reserves, these developments signal China’s broader ambition to “de-dollarise” global trade. Africa has now emerged as the critical testing ground for the internationalisation of the Chinese yuan.

Breaking: African Nations Embrace the yuan as Zambia Allows Tax Payments in Chinese Currency

In a swift shift shaping Africa’s financial landscape, Zambia has become the first country on the continent to permit mining taxes to be paid in Chinese yuan. The move marks a notable step in Beijing’s broader strategy to internationalise the yuan and gradually reduce reliance on the U.S. dollar in international trade and finance.

Following Zambia’s example, Kenya is restructuring key loan agreements by converting railway financing into yuan, a move aimed at trimming costs and diversifying its debt portfolio. Ethiopia is reportedly weighing similar discussions as it negotiates debt with external creditors.

Observers say the trend signals a quiet but meaningful push to de-dollarise trade ties in Africa, a region long shaped by infrastructure deals and dollar-dominated finance. Though the yuan’s share of central-bank reserves remains modest, its growing footprint in Africa is being watched closely by markets and policymakers alike.

What’s Driving the Shift?

China’s strategy in Africa has expanded beyond traditional road,rail,and port projects. By enabling yuan-based tax payments and loan restructurings, Beijing is seeking to broaden the yuan’s practical use in daily fiscal and financial operations. The move also occurs amid broader global discussions about reducing exposure to the U.S. financial system amid periodic tensions and tariff practices in recent years.

While the yuan is not yet a dominant part of global reserves, the developments in Africa position the continent as a critical testing ground for expanding the yuan’s acceptance in real-world financial dealings. Analysts caution that Africa’s adoption is incremental and contingent on each country’s sovereign decisions, commodity cycles, and credit conditions.

Key Facts At A Glance

Country	Policy Move	New Yuan Use
zambia	Allow mining taxes to be paid in yuan	Taxes paid directly to the state in Chinese currency	Practical step toward yuan integration in fiscal operations; copper export economy
Kenya	Restructuring railway loans into yuan financing	Debt payments and loans denominated in yuan	Cost containment and currency diversification of critical infrastructure debt
Ethiopia	Engaged in debt discussions on yuan-based options	Exploration of yuan-denominated debt arrangements	Potential broader use of yuan in sovereign debt management

evergreen insights: What this could mean for markets and the continent

Global investors are watching how real-world currency use evolves outside traditional reserve holdings. if yuan-denominated payments and debt become more common, several dynamics could unfold: lower currency exchange risk for exporters and importers dealing with Chinese buyers, potential shifts in commodity pricing benchmarks, and a gradual rebalancing of Africa’s debt portfolio away from sole reliance on dollar-denominated finance.

For Africa, the trend may sharpen the region’s role as a testing ground for currency diversification, while continuing to tie local economies to broader China-led trade and investment ecosystems. Markets will assess currency liquidity, settlement reliability, and the political economy of cross-border finance as these yuan-based arrangements mature.

Policy-wise, observers expect more transparent international cooperation to accompany yuan expansion, including technical standards for settlement, currency risk management, and creditor-debtor governance. The coming years could reveal whether yuan use translates into broader financial sovereignty or simply reflects targeted, project-specific arrangements.

what to watch next

• Will more African states follow suit with yuan-denominated taxes or debt instruments?
• How will Yuan-based finance affect commodity sectors,exchange rates,and reserves in sub-Saharan economies?

Reader Engagement

How would yuan-based tax payments change the financial planning and risk exposure of mineral-rich economies in Africa?

could this shift accelerate a broader reconfiguration of Africa’s trade and investment ties beyond China?

Share your thoughts in the comments and join the discussion about how currency choices could reshape Africa’s economic future.

Financed through a $3.2 billion USD loan from China’s Exim Bank.

Zambia’s Ground‑breaking Yuan Tax Regime

• Policy launch (January 2026) – Zambia became the first African nation to permit mining firms to settle corporate taxes and royalties in Chinese yuan (CNY).
• economic rationale
1. Copper‑centric trade – Over 70 % of Zambia’s copper export revenue is invoiced in yuan, reflecting China’s position as the single largest buyer of Zambian copper.
2. Currency‑hedge savings – By matching tax liabilities with yuan‑denominated earnings, firms reduce exposure to volatile USD/EUR exchange rates.
3. Fiscal incentives – The Zambian Revenue Authority announced a 2 % tax credit for companies that elect the yuan option, encouraging rapid uptake.

“The yuan tax framework aligns our fiscal system with the reality of our trade patterns,” said Zambia’s Finance Minister at the policy unveiling.

Kenya’s Railway Loan Restructuring into yuan

• Background – Kenya’s Standard Gauge Railway (SGR) was initially financed through a $3.2 billion USD loan from China’s Exim bank.
• 2026 restructuring deal
• Conversion rate: $1 = 7.5 CNY (fixed for the loan’s remaining 12‑year term).
• Cost benefit: Preliminary analysis shows a ≈ 4.3 % reduction in total interest payments compared with the original USD schedule.
• Implementation steps
1. Legal amendment – Kenya Parliament passed the Railway Finance (Currency Conversion) Act 2026.
2. Banking coordination – The Central Bank of Kenya opened a dedicated yuan clearing account to streamline cross‑border settlements.
3. Capacity building – Training workshops were held for treasury officials on yuan‑FX risk management.

Ethiopia’s Emerging Yuan Debt Dialogue

• Current debt profile – Ethiopia carries roughly $10 billion in external sovereign debt, with a growing share owed to Chinese lenders.
• 2026 negotiation highlights
• Pilot swap proposal: Convert up to $500 million of short‑term concessional loans into yuan, subject to IMF approval.
• Strategic aim: Reduce reliance on the SWIFT network and diversify reserve assets away from the US dollar.
• Potential impact
• Reserve diversification: A prosperous swap could raise Ethiopia’s yuan holdings from < 0.2 % to > 1 % of total foreign reserves.
• Trade facilitation: Enables Ethiopian exporters (e.g., coffee, textiles) to invoice in yuan, matching import‑payment flows from China.

Drivers Behind the African Yuan Shift

Driver	Description	Example
Trade concentration	China accounts for 30‑40 % of African export destinations, especially in minerals and agriculture.	Zambia’s copper shipments to China (≈ $4.2 bn/yr).
US‑China trade tension	Tariffs and sanctions under the Trump management prompted African governments to seek alternatives to the dollar‑centric system.	Kenya’s cost‑saving loan conversion after US‑ imposed tariffs on copper.
Beijing’s “One belt, One Road” evolution	The Belt & Road Initiative now emphasises financial integration, not just physical infrastructure.	China’s new “Currency Cooperation Framework” signed with Kenya (2025).
Reserve diversification	African central banks aim to lower dollar exposure and mitigate inflationary pressure from US monetary policy.	Ethiopia’s pilot yuan‑swap project.

Benefits of Yuan Adoption for African Economies

• Reduced transaction costs – Lower conversion fees when invoicing and repaying Chinese trade partners.
• Enhanced monetary sovereignty – ability to manage foreign‑exchange risk without defaulting to the dollar’s volatility.
• Improved access to Chinese financing – Yuan‑denominated loans ofen come with longer grace periods and lower interest rates.
• strategic leverage – Nations that align financially with Beijing can negotiate better terms on future infrastructure projects.

Practical Tips for Companies Operating in the Yuan Ecosystem

1. Open a yuan‑clearing account with a locally licensed bank that participates in the Cross‑border Interbank Payment System (CIPS).
2. Adopt dual‑currency invoicing – Quote both USD and CNY; include a clause allowing the buyer to choose the payment currency.
3. Implement hedging tools – Use forward contracts or yuan‑linked swaps offered by regional banks to lock in exchange rates.
4. Monitor regulatory updates – Stay abreast of Central Bank of Kenya and Ethiopia’s foreign‑exchange guidelines to ensure compliance.
5. Leverage government incentives – claim tax credits or subsidies tied to yuan usage (e.g., Zambia’s 2 % tax credit).

Real‑World Case Studies

• CopperCorp Zambia Ltd. – Switched 80 % of its tax payments to yuan within six months, reporting a $1.9 million reduction in currency‑conversion expenses.
• Nairobi Metro Rail Ltd. – After the loan conversion, projected savings of $135 million over the loan’s life, enabling the allocation of funds to a new commuter line.
• ethiopia Coffee Exporters association – Piloted yuan invoicing for premium Arabica beans,achieving a 3 % price premium from Chinese buyers who prefer yuan‑settled contracts.

Outlook: Africa as the Testing Ground for Yuan Internationalisation

• Reserve statistics (mid‑2026) – Global central‑bank yuan holdings rose to 2.5 % of total reserves, with African banks contributing ≈ 0.6 % of that share.
• Projected growth – IMF forecasts suggest yuan‑denominated african trade could reach $45 billion by 2028, up from $22 billion in 2024.
• Policy horizon – Ongoing dialogues within the african Union’s Financial Integration Commitee aim to develop a continent‑wide framework for yuan settlements, potentially culminating in a dedicated “African Yuan Clearing Hub” by 2029.

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Prepared for Archyde.com – Published 2026‑01‑20 20:11:24