Zambia has become the first African country to formally accept China’s yuan for the payment of mining taxes and royalties, a move that highlights Beijing’s growing financial influence in the continent’s most strategic resource sectors.
The Bank of Zambia (BoZ) confirmed that payments in renminbi began in October, marking a significant change in how Africa’s second-largest copper producer manages its mining revenues.
Bloomberg reported that Chinese mining operators are now settling part of their tax obligations in yuan, reflecting China’s growing role as Zambia’s largest copper buyer and one of its largest creditors.
The financial institution also said that the change is in line with its reserve management strategy and the reality of exports.
“A large part of copper exports go to China, and Chinese mining companies already receive part, if not all, of their payments for exports to China in renminbi,” said a BoZ representative.
“The Bank of Zambia’s main objective is to diversify and increase its reserves, and the acquisition of renminbi allows the bank to achieve this goal.”
The entity added that holding yuan also makes servicing Chinese debt cheaper, stating that it will allow Zambia to “serve its debts to China more economically.”
China’s mining money accompanies currency change in Africa
Zambia’s decision comes at a time when Africa is becoming a testing ground for China’s long campaign to internationalize the yuan.
Business Insider Africa reported in October that Kenya had converted part of its Chinese debt into yuan, a move designed to ease pressure on its indebted finances.
The country expects to save around $250 million a year after restructuring its $5 billion railway loan from the Export-Import Bank of China into yuan-denominated debt.
Ethiopia has begun talks to do the same, and Zambia itself has said it would consider following suit.
To support the change, the BoZ began publishing an official renminbi-kwacha exchange rate last month, allowing mining companies to choose between selling dollars or yuan to pay taxes.
The system is based on rules introduced in 2018 and expanded in 2020, which required miners to sell foreign currency to the central bank to bolster the country’s depleted reserves during the debt crisis.
The shift to yuan payments signals that China’s influence in Africa’s mining economy is now being matched by the growth of its monetary presence.
Source: Business Insider Africa
