Keypoints:
- Egypt signs major yuan trade deal with China
- Africa adopts CIPS to bypass dollar reliance
- Growing trend sees yuan rise in African trade
AFRICA’S pivot toward the Chinese yuan gathered momentum this week as Egypt signed a sweeping set of agreements with Beijing aimed at increasing the use of the Chinese currency in bilateral trade. The deals were finalised during Chinese Premier Li Qiang’s visit to Cairo and reported by the South China Morning Post.
The agreements between the People’s Bank of China and Egypt’s central bank cover currency swap arrangements, digital payment systems, and yuan-denominated ‘panda bonds’ for overseas firms operating in China.
Cairo adopts CIPS to bypass dollar
A key element of the deal is Egypt’s entry into China’s Cross-border Interbank Payment System (CIPS), an alternative to the US-dominated SWIFT financial network. This will allow banks operating in Egypt’s TEDA Suez Economic Zone to carry out cross-border transactions directly in yuan—skipping the US dollar entirely.
The shift reinforces a growing push by African countries to reduce reliance on Western financial systems, especially amid rising global tensions.
Africa’s financial realignment deepens
Egypt now joins Nigeria, Angola, and South Africa in shifting parts of their financial infrastructure to accommodate the yuan. Nigeria recently renewed a 15 billion yuan ($2bn) currency swap with China, while South Africa has maintained a similar agreement since 2015, recently adding a 2.1 billion yuan loan deal with the China Development Bank.
China’s trade with Africa has expanded significantly—now accounting for 20 percent of the continent’s total global trade, up from just 5 percent two decades ago, according to the African Export-Import Bank (Afreximbank). The bank has also joined CIPS to accelerate and simplify yuan-denominated transactions.
Yuan’s rise faces slow, strategic road
Despite the enthusiasm, analysts note the yuan’s rise will be gradual. Lauren Johnston, senior research fellow at the AustChina Institute, explained that capital controls and regulatory hurdles remain.
‘Any change related to internationalising the RMB will be incremental,’ Johnston said. She pointed to factors such as exchange rates, policy constraints, and capital flows as ongoing challenges.
Still, the broader momentum appears irreversible. The freezing of Russia’s reserves by Western powers following the Ukraine war exposed the vulnerability of countries tied to US and EU-controlled financial networks—driving interest in alternative platforms like CIPS.
Banks and bonds signal deeper integration
South Africa’s Standard Bank, Africa’s largest lender and partly owned by China’s ICBC, is already using CIPS for direct yuan-based interbank payments.
According to sub-Saharan Africa analyst Aly-Khan Satchu, the impact could be significant: ‘This could potentially go to 100 percent of the trade number,’ he said, adding that Africa’s yuan shift may start small but has wide strategic implications.
As more African countries turn to China’s financial tools—from swap lines to CIPS and panda bonds—the continent is positioning itself at the centre of a historic currency realignment.
