Bloomberg reported on October 14 that Zambia stated that starting next year, some of its copper exports to China will be settled in the Chinese yuan. This reflects the trend of African countries increasingly using the yuan as a substitute for the US dollar.
Zambia is the second-largest copper producer in Africa. Denny Kalyalya, the central bank governor of Zambia, said during an interview at the International Monetary Fund (IMF) annual meeting in Bangkok that this arrangement will be implemented first among Chinese mining companies. These companies are already using the Renminbi to pay taxes in Zambia.
This is a starting point," Kaia said, "we also hope that future loans can be priced in RMB. This will be a great help."
Zambia is discussing currency swaps with China. Kayaia stated that adequate capital flows are key to implementing these swaps. He also added that using the RMB for copper exports to China will help implement these plans, while reducing the currency conversion costs associated with the use of US dollars and minimizing the exchange rate fluctuations of the Zambian currency, the Kwacha.
Reports say that more and more African countries are beginning to use the yuan in their economic dealings with China. Currently, the number of African financial institutions that have joined the Cross-border Payment System (CIPS) is increasing. CIPS is a cross-border payment and settlement system based on the yuan established by China, and it is seen as an alternative to the SWIFT international payment system.
