China’s tariff cuts for Africa boost trade and support wider yuan adoption

China’s decision to eliminate tariffs on imports from most African countries, combined with rapidly expanding trade flows, appears set to boost the use of the yuan across the continent, supporting Beijing’s broader objective of building alternatives to the Western financial system.

Customs data show that China-Africa trade grew by approximately 18% last year. The removal of tariffs on imports from 53 African countries in May is expected to further increase trade flows and encourage payments denominated in yuan.

Research by the International Monetary Fund indicates that yuan usage tends to rise alongside growing trade ties with China. On Wednesday, Beijing announced new measures aimed at promoting the global use of its currency.

From Nigerian cattle bone pellets and Kenyan avocado oil to South African apples, Chinese ports are receiving greater volumes of African cargo following the tariff cuts. The trend is increasing demand for payments and currency exchanges between the yuan and local African currencies.

Although reliable data on yuan usage in Africa remain limited, adoption is being supported by expanding trade with China, new payment platforms and efforts by some countries to shift debt obligations into lower-cost currencies.

Birju Sanghrajka, chief executive of Standard Chartered Kenya, said yuan transactions were increasing but added that there were still few signs that the currency was displacing the dollar.

“We see it as complementary,” Sanghrajka said.

South Africa-based Standard Bank became the first African commercial bank to connect to China’s Cross-Border Interbank Payment System (CIPS) in November and processed $500 million in transactions during its first four months on the network.

“The transactions we have seen were mainly driven by import and export activities between China and Africa,” said Ives Yang, head of transaction banking sales at Standard Bank CIB.

“We are working to expand CIPS to more countries,” he added.

Beijing says the tariff exemptions are intended to support African exports.

“In an environment where unilateralism and protectionism are creating difficulties and challenges for African countries, China is leveraging the advantages of its enormous market,” Chinese Commerce Ministry spokesman He Yadong said.

Trade flow perspective

Bankers say the shift toward the yuan reflects growing trade volumes rather than a direct challenge to the dominance of the US dollar.

Standard Chartered Kenya has begun issuing yuan-denominated letters of credit. According to Sanghrajka, this allows Kenyan clients to obtain discounts by avoiding conversion costs associated with the dollar.

China and several other countries, including Russia, have promoted payment channels that bypass the dollar. The trend has drawn warnings from US President Donald Trump against abandoning the US currency.

“Part of what we are seeing globally today concerns how the dominance of the dollar can be reduced,” said Muda Yusuf, chief executive of Nigeria’s Centre for the Promotion of Private Enterprise, adding that China is actively promoting yuan-based payment systems.

“When you export to them, you receive your payment in yuan,” Yusuf said.

Reducing foreign exchange risk

According to the African Export-Import Bank, which signed an agreement last year to connect to CIPS, China now accounts for 20% of Africa’s external trade, up from 5% two decades ago.

Other institutions are also seeking to capitalize on the trend.

Togo-based Ecobank, which operates in 34 African countries, and the Bank of China are working to launch a payment product this year that will facilitate transactions between the yuan and local African currencies.

“China is building its own payment and settlement rails that can make transactions almost instantaneous,” said Ecobank Chief Executive Jeremy Awori.

The development is welcome news for investors such as Qu Ming, a Chinese national who owns Kenya-based Sanmark Limited. Moving from dollar-denominated transactions to yuan payments could benefit the avocado oil producer, which employs 50 people.

“This will help us because of the exchange rate,” Qu said, adding that borrowing costs could also decline because yuan interest rates are lower.

China’s position as the largest bilateral creditor to countries including Senegal, Ethiopia and Kenya is also contributing to wider yuan adoption across Africa.

Last year, Kenya converted three Chinese-financed railway construction loans from dollars into yuan, reducing annual interest costs by approximately $215 million. Zambia has announced that from late 2025 it will begin accepting mining royalties and taxes from Chinese companies in yuan to strengthen its reserves and help service debt owed to China.

Avocado exports to China

According to Chinese government officials, the country’s yuan-denominated imports and exports rose 14% year-on-year in April to 4.38 trillion yuan ($647 billion). However, authorities did not provide a separate figure for Africa.

The trend is also visible in Kenya. Avocado exports to China’s vast consumer market have increased from 10 to 20 containers per week in 2022 to around 200 containers today. Volumes are expected to reach 1,000 containers by 2030, putting China on par with Europe, which has long been Kenya’s largest export market.

Speaking at a packing facility just outside Nairobi, Sunripe Managing Director Thiku Shah said China could surpass Europe between 2030 and 2035. He also said a shift by Kenya toward yuan-denominated financing could accelerate the currency’s use in trade.

“If we can invoice in yuan, if banks can accept payment in yuan, and if we can find a buyer for the yuan we hold, that would be perfect,” Shah said.