Can the Chinese Yuan rescue Africa from high USD debt burden? World Reframed 13
Africa’s debt burden continues to dominate headlines as governments grapple with rising interest payments and heavy dependence on the U.S. dollar. According to the International Monetary Fund (IMF), nearly 70% of African countries now spend more on debt servicing than on essential sectors such as education and healthcare.
The continent’s top five debtors —South Africa ($170.5 billion), Egypt ($165.4 billion), Morocco ($69.3 billion), Angola ($56.6 billion), and Nigeria ($46.6 billion) —reflect the scale of the problem. Across cities like Accra, demonstrators are calling for a fairer global financial system, arguing that high borrowing costs and dollar exposure have left African economies trapped in cycles of dependency.
Kenya’s Bold Step: Converting Dollar Debt to Yuan
Some African governments are rethinking how they borrow. Kenya has taken a pioneering step by converting $3.5 billion of loans from China into yuan-denominated debt, a move expected to save the country $215 million annually. This strategy reduces exposure to the strengthening U.S. dollar and signals a broader push toward “de-dollarisation”, diversifying currency options to stabilise national economies and increase fiscal independence.
Angola’s Return to Global Markets
While Kenya experiments with currency diversification, Angola has chosen to re-engage international investors. The country has issued five- and ten-year Eurobonds to raise $1.5 billion, marking its first bond sale since 2022. Led by major global banks including Citi, Deutsche Bank, JPMorgan, and Standard Chartered, the sale points to renewed investor confidence in African economies. Yet, experts warn that poor credit ratings still force many countries to borrow at interest rates as high as 12%, as noted by MacDonald Goanue of the ECOWAS Bank for Investment and Development.
Creative Financing and Regional Solutions
To ease the debt burden, several African nations are adopting innovative financial tools. Securitisation, which allows governments to use future revenue streams as collateral, and debt-for-nature swaps, which forgive debt in exchange for environmental protection, are gaining traction. Additionally, regional banks are offering concessional loans with lower interest rates and longer repayment periods. There is also growing advocacy for trading in African currencies and building stronger regional financial institutions to reduce reliance on Western lenders.
From Necessity to Strategy
Africa’s debt story is evolving from borrowing out of necessity to borrowing with strategy. However, global inflation, commodity price drops, and geopolitical instability still threaten progress. As Kenya, Angola, and others demonstrate, African countries are reclaiming agency in the global financial system. The focus is shifting from repayment to reimagining the structures that have historically constrained the continent’s growth.
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World Reframed is produced in London by Global South World, part of the Impactum Group. Its editors are Duncan Hooper and Ismail Akwei.
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This story is written and edited by the Global South World team, you can contact us here.
