Zambia has begun accepting China’s yuan for mining taxes and royalties, becoming the first African country to do so, a move that highlights Beijing’s growing financial footprint on the continent and Africa’s search for alternatives to the US dollar.
The policy allows Chinese mining companies operating in Zambia Africa’s second-largest copper producer to pay fiscal obligations in renminbi, also known as the yuan, according to a report by Bloomberg citing the country’s central bank. On current exchange rates, one yuan (US$0.14) trades at about 3.15 Zambian kwacha.
Zambia’s authorities said holding part of the country’s foreign-currency reserves in yuan would also help service debts owed to China more cheaply, reducing transaction costs and currency conversion risks.
China is Zambia’s largest bilateral creditor and a dominant player in its mining sector, particularly copper, which is the backbone of the southern African nation’s economy and a key export for global energy transition technologies.
The move comes as many African countries grapple with persistent dollar shortages, high debt servicing costs and volatile exchange rates, pressures that have intensified since global interest rates rose sharply in recent years.
By allowing payments in yuan, Zambia effectively aligns part of its revenue stream with its external liabilities, creating a natural hedge against currency fluctuations when repaying Chinese loans.
However, the decision has drawn caution from some economists, who warn that the yuan is not yet a fully global trading or reserve currency.
Economist Trevor Hambayi said Zambia may have moved too quickly, arguing that the country should have waited until the yuan was more widely recognised and freely traded internationally.
While China has steadily expanded the use of its currency in global trade and finance, the yuan still accounts for a relatively small share of global reserves and is subject to capital controls imposed by Beijing.
Supporters of the policy say the practical benefits outweigh the risks, particularly given Zambia’s deep economic ties with China.
Chinese firms dominate Zambia’s mining landscape, and Beijing has financed roads, power projects and other infrastructure across the country over the past two decades. Accepting yuan payments reduces costs for Chinese operators and may make Zambia a more attractive destination for further investment.
The decision also reflects a broader trend across Africa, where governments are exploring ways to diversify currency exposure amid tightening global financial conditions.
Several African central banks have increased holdings of non-dollar currencies in recent years, seeking to reduce vulnerability to US monetary policy and fluctuations in dollar liquidity.
Zambia’s move is likely to be closely watched by other resource-rich African countries with significant Chinese involvement, including the Democratic Republic of Congo, Angola and Zimbabwe. Analysts say similar arrangements could emerge elsewhere if Zambia’s experience proves effective.
Yet the implications extend beyond technical currency management. For Western governments and financial institutions, the decision underscores China’s expanding influence in African finance and trade, and the gradual shift toward a more multipolar global monetary system.
Zambia’s own economic history adds weight to the decision. The country defaulted on its external debt in 2020 and spent years negotiating a restructuring with creditors, including China. Since emerging from default, Lusaka has sought to stabilise its finances and avoid future balance-of-payments crises.
Accepting yuan for mining revenues is part of that broader effort, officials say, to improve liquidity management and reduce reliance on scarce dollars.
Critics caution, however, that overreliance on any single foreign currency carries risks, particularly one whose convertibility is managed by a foreign government.
For now, Zambian authorities insist the policy is limited in scope and driven by economic pragmatism rather than geopolitical alignment.
As Africa’s biggest copper producers ramp up output to meet global demand for electric vehicles and renewable energy infrastructure, how countries are paid and in which currency is becoming an increasingly strategic question.
Zambia’s yuan experiment may mark a small step, but it signals a potentially significant shift in how African economies navigate a changing global financial order.
