China is pushing to internationalise the yuan - Africa is key to a global yuan strategy

Kenya recently signed a currency swap agreement with China, effectively allowing Nairobi to borrow and settle trade in yuan instead of dollars. This agreement signalled a new phase in Beijing's quiet but deliberate campaign to internationalize the yuan through Africa. The deal marks the first of its kind in Africa and could pave the way for other African economies, such as Nigeria, South Africa, Egypt, Angola, Zambia, and Ghana, to follow suit. At first glance, the move seems purely pragmatic for Kenya to gain access to the much-needed liquidity in a time of persistent dollar scarcity. On the other hand, China is strengthening its financial ties with one of Africa's most dynamic economies. But beneath the surface lies a larger geopolitical and monetary strategy. The one aimed at reducing global dependence on the United States (US) dollar and expanding the yuan's reach in emerging markets. The yuan is now the 4th most active currency for global payments after the US dollar, Euro and British pound. Cross-border usage for China has reached a record US$724.9 billion, representing 54.3 % of China's external payments. This is making the yuan, a strong contender in the currency market.