Africa's pace of using the Chinese yuan and local currencies for trade settlements exceeds expectations

According to Bloomberg, due to the United States' capricious tariff policies have already affected African businesses, Africa is accelerating its efforts to reduce dependence on the US dollar, exploring the use of the Chinese yuan and local currencies for trade settlements. Liu Qinghai, director of the African Economic Research Institute at Zhejiang Normal University, told Sputnik News that the massive trade volume between China and Africa provides a solid foundation for using the Chinese yuan and local currencies for settlements. The process of moving away from the US dollar is accelerating, which helps weaken the global value chain rules dominated by the West and enhance the voice of the Global South.

According to official US data, total non-US trade in 2025 amounted to $83.4 billion. In addition, according to UN data, intra-African trade in 2024 was approximately $220 billion, accounting for 15% of Africa's total trade.

Jeremy Awori, CEO of the Pan-African Banking Group (Ecobank), said that although the level of trade between Africa and the United States is relatively low, former President Trump's tariff policies still had an impact on Africa. The expiration of the US Africa Growth and Opportunity Act also brings more uncertainties for African manufacturers and exporters.

The Africa Growth and Opportunity Act was passed in 2000, aiming to strengthen economic support for countries in sub-Saharan Africa, providing duty-free access to the US market for about 1,800 South African products. Although the act was extended this year, the extension period ends at the end of 2026, far shorter than previous extensions of 15 or 10 years.

Awori said: "We will see more options for direct exchange of the Chinese yuan into African currencies. We also need to consider trade in African currencies, because if transactions can be conducted in local currencies, it can relieve the pressure on demand for the US dollar."

Regarding this, Liu Qinghai stated that the trade volume between China and Africa in 2025 has exceeded $348 billion, far exceeding the $83.4 billion in trade between Africa and the US during the same period. Such a massive trade volume provides a solid application scenario for Africa to promote the use of the Chinese yuan and local currencies for settlements. In addition, the risk of weaponizing the US dollar and the uncertainty of the US tariff policy make both China and Africa have the motivation to accelerate the use of the Chinese yuan and local currencies for trade settlements.

Liu Qinghai pointed out that the speed of this promotion may be faster than many people expect, as it has already moved from slogans to specific payment, taxation, and debt management.

Liu Qinghai listed several examples:

In February of this year, the Pan-African Payment and Settlement System (PAPSS) connected with Kenya's instant payment system Pesalink, allowing cross-border payments within Africa to be directly made in local currencies, bypassing the US dollar, greatly reducing transaction costs and time.

By the end of 2025, Zambia became the first country in Africa to allow Chinese mining companies to pay mining taxes in the Chinese yuan, and began to publish the official exchange rate of the Chinese yuan to the Zambian kwacha.

Kenya converted part of its debt to China into RMB-denominated, saving about $250 million in annual debt repayment costs. Countries such as Ethiopia are also exploring similar mechanisms.

Original article: toutiao.com/article/1858350179956812/

Statement: This article represents the views of the author alone.