Several African countries have begun converting their dollar-denominated debt into Chinese yuan, a shift that both eases financial pressure on heavily indebted nations and helps China expand the global reach of its currency. According to Les Échos, Ethiopia and Kenya have already taken steps toward yuan-based restructuring, with others preparing to follow.
Kenya finalized the conversion of three Chinese loans—worth roughly $3.5 billion—last month. The loans originally funded a modern railway linking the port of Mombasa to a station near Naivasha in Rift Valley Province. Ethiopia is now negotiating with Beijing to convert at least part of its $5.38 billion in Chinese debt into yuan-denominated loans. Zambia’s finance minister says the government is closely watching Kenya’s deal, while Sri Lanka has also signaled interest.
The savings are significant. Yuan loans generally carry preferential interest rates of around 3 percent, compared with more than 7 percent for dollar borrowing. Kenya’s finance minister John Mbadi estimates that switching to yuan-based loans will save the country about $215 million annually.
For China, the conversions strengthen the yuan’s role in African sovereign debt markets, advancing Beijing’s long-term goal of currency internationalization. Economist Julien Marcilly notes this also reflects a broader reevaluation of the U.S. dollar’s safe-haven status, pointing to Panama and Colombia recently issuing debt in Swiss francs.
Dollar borrowing has become increasingly costly: the U.S. currency has fallen roughly 10 percent since early this year under the Trump administration, while U.S. interest rates have climbed from 1 percent in early 2021 to around 4.15 percent today.
Despite a slowdown in new lending, China remains the world’s largest bilateral creditor. Between 2008 and 2024, its development and export-import banks committed more than $472 billion. Across Asia, the Gulf, and Africa, governments are now seeking to reduce reliance on the dollar, diversify reserves, and shield themselves from Washington’s sanctions and policy swings—while China moves to expand its influence through the rise of the yuan.
Source: Radio France International, November 7, 2025
https://rfi.my/CAG2