China is strengthening financial partnerships with African countries as part of a strategic push to internationalise the yuan and reduce dependence on the US dollar in trade and investment.
During Chinese Premier Li Qiang’s recent visit to Cairo, the People’s Bank of China and Egypt’s central bank signed several agreements aimed at expanding yuan usage in bilateral transactions, the South China Morning Post (SCMP) reported.
These include exploring currency swap arrangements, cooperation on electronic payments, and issuing yuan-denominated “panda bonds” by overseas companies in China’s domestic markets. A key feature of these agreements is the promotion of China’s Cross-border Interbank Payment System (CIPS), an alternative to the US-dominated SWIFT financial network. This will enable banks operating in the China-Egypt TEDA Suez Economic and Trade Cooperation Zone to conduct cross-border transactions directly in yuan, bypassing the US dollar.
Expansion of Yuan use across Africa
Egypt joins other African countries such as Nigeria, South Africa, and Angola that have signed similar yuan-based trade and finance deals with China. Nigeria renewed its 15-billion-yuan (US$2 billion) currency swap with China in December. South Africa’s currency swap with Beijing dates back to 2015 and was recently supplemented by a 2.1 billion yuan loan agreement with the China Development Bank.
China’s growing presence in Africa aligns with its broader goal of testing the yuan’s internationalisation in regions where its trade influence is significant. According to the African Export-Import Bank (Afreximbank), China now accounts for 20% of Africa’s global trade—up from 5% two decades ago. Afreximbank recently joined CIPS to facilitate faster and more autonomous yuan transactions within China-Africa trade.
