African Nations Prefer China's Yuan Over US Dollar: A BRICS Perspective

• BRICS De-Dollarization Continues as African Nations Increase Yuan Holdings
• China's Growing Influence in Africa
• BRICS Alliance Impact on African Nations
• Significant Currency Deals
• The Implication of Yuan Expansion

BRICS De-Dollarization Continues as African Nations Increase Yuan Holdings

The ongoing de-dollarization campaign of BRICS (Brazil, Russia, India, China, and South Africa) sees an influx of African countries augmenting their reserves with China's Yuan, thus lessening their dependency on the U.S. Dollar. The rise of the Yuan in Africa can be attributed to concerns over escalating debt repayments. It is clear that China views its growing influence in Africa as a key component of its de-dollarization agenda.

China's Growing Influence in Africa

A number of African nations such as South Africa, Egypt, and Ethiopia are already part of the alliance. Furthermore, several other African countries are expressing interest in joining the bloc. This trend likely stems from the ongoing global economic shift. The Bank of China (BOC) is becoming a common reference in Africa, offering its services in countries such as Zambia, South Africa, and Kenya. This is not merely a sign of increased Chinese collaboration, but an indication of a deeper economic shift.

BRICS Alliance Impact on African Nations

Reports emphasizes the impact of the BRICS alliance on African countries increasing their holdings of the Chinese Yuan, moving away from the US Dollar. This relationship is undoubtedly mutually advantageous. BOC's vice-president, Lin Jingzhen, discussed the growing influence of the Yuan in Africa during a visit to Zambia last year.

According to Lin, China's objective is to assist other African countries in providing comprehensive products and services related to the Yuan, and promote the use of the Yuan in bilateral trade and economic activities. These discussions were held against the backdrop of significant currency deals.

Significant Currency Deals

China consented to restructure $6.3 billion in Zambian loans. Beyond that, Egypt issued three-year panda bonds worth 3.5 billion Yuan. Kenya is also contemplating using similar bonds to raise funds to retire a $2 billion Eurobond due in 2024.

The Implication of Yuan Expansion

The proliferation of Yuan usage presents significant opportunities for China, especially in terms of promoting its currency and gaining more foreign policy leverage. This development is poised to further cement the geopolitical shift that is already in motion, one that challenges the global dominance of the US Dollar.

Edited by Jonathan Stoker