Introduction
China’s central bank digital currency (CBDC), the e-CNY or “digital yuan,” represents a new phase in global finance. Launched in pilot form in 2020, the e-CNY has rapidly scaled up. By mid-2024, over 7 trillion yuan ($986 billion) had been transacted in pilot programs, nearly four times the level a year earlier. In June 2024, the e-CNY was in use across 17 provinces and sectors (education, healthcare, tourism, etc.) and was still the world’s largest CBDC project.
In mid-2024, the PBOC even removed the word “pilot” from the digital yuan mobile app, signaling that an official launch may be near. The PBOC developed the e-CNY starting in 2014, and it now circulates alongside cash as part of China’s monetary base. Unlike decentralized cryptocurrencies, the e-CNY is a fully state-issued digital currency (with one-to-one parity to the renminbi) and can be used offline via smart cards or phone
Chinese policymakers see the digital yuan as a tool to internationalize the renminbi (RMB) and reduce dependence on the dollar-based financial system. Indeed, China has become sub-Saharan Africa’s largest trading partner and creditor in recent decades. In 2023, two-way China-Africa trade hit a record $282 billion, accounting for about 20% of African exports and 16% of imports according to the IMF figure.
China also holds a large share of African debt: its share of sub-Saharan external public debt grew from under 2% in 2005 to about 17% ($134 billion) by 2021. Chinese foreign direct investment flows into Africa have similarly surged, reaching about $5 billion in 2022. Much of this flows through the Belt and Road Initiative (BRI), China’s 2013 infrastructure push. In 2024, China’s BRI commitments to Africa were $29.2 billion (up 34% from 2023, spanning energy, mining, tech, and transport projects. In short, China-Africa ties are deep in trade, finance, and infrastructure, and many African countries have large Chinese projects or loans.
These ties suggest potential uses for the digital yuan in Africa. For example, Chinese firms paying African suppliers (or vice versa) could settle in e-CNY instead of USD, and African traders might import Chinese goods and pay in digital yuan. Cross-border e-CNY payments are already being tested in various trade corridors. In late 2023, the Bank of China completed a ¥100 million (~$14 million) cross-border settlement for precious metals via e-CNY. The same pilot also saw an iron ore import paid in e-CNY.
China has similar arrangements elsewhere, for instance, Singapore now allows Chinese tourists to spend digital yuan, and an e-CNY payments cooperation agreement was signed with the UAE in December 2023. On a system level, China has built an alternate payment network (the Cross-Border Interbank Payment System, CIPS, and now e-CNY rails) that could eventually connect with partner countries.
Project mBridge (a BIS/BIS Innovation Hub initiative) has developed a multi-CBDC platform involving China, Hong Kong, Thailand, UAE, and Saudi Arabia to allow near-instant trades and FX settlements. Notably, several African central banks are observing or considering mBridge: the Bank of Mauritius, Bank of Namibia, Central Bank of Egypt, and South African Reserve Bank are among its observers. This indicates official interest in how CBDCs might link Africa and China’s financial systems.
1. Potential benefits for African economies
Using the e-CNY could reduce reliance on the US dollar, lowering transaction frictions. Today, around 80% of intra-African payments route through Europe or the US via dollars, incurring extra fees and delays. For example, remitting funds from South Africa currently costs about 13% of the transfer, more than double the G20 average. Switching to digital yuan (or other local CBDCs) could cut these costs sharply: in a typical PAPSS-style transaction on Africa’s new pan-African settlement network, a $500 trade costs only $2 via PAPSS vs $60–$70 on SWIFT. Likewise, IMF analysts estimate that Africa’s remittance fees (averaging ~8% of amounts sent could fall if CBDCs shortened the payment chain and fostered competition.
Faster settlement is another gain: pilots have shown cross-border e-CNY payments settling in seconds rather than days. In one trial (Hong Kong–Abu Dhabi), a payment cleared in about 7 seconds with fees down by 98%. In comparison to SWIFT transfers typically take 3–5 days. Such speed and transparency, with built-in “programmable” compliance checks, promise to boost trade efficiency.
Beyond trade, the e-CNY could help financial inclusion. Many Africans remain unbanked but have mobile phones (sub-Saharan mobile penetration is ~44% and internet/mobile connectivity ~27% as of 2023. A digital wallet for e-CNY on a smartphone (or even a simple offline card) could reach rural or informal communities. The IMF notes that CBDCs can “bring financial services to people who previously didn’t have bank accounts, especially if designed for offline use,” enabling small cross-border transfers or welfare payments even in remote areas. By reducing reliance on foreign currency accounts, CBDCs also empower African central banks to manage monetary policy more directly.
In principle, accepting e-CNY payments could also give African exporters easier access to the vast Chinese market. For example, Chinese industries or buyers who prefer or require RMB settlements could work more seamlessly with partners who also take e-CNY. Finally, as China has become a key financing and trade partner, deeper e-CNY integration could attract Chinese investment and technology (e.g., fintech platforms) to African markets.
2. Potential challenges
Realizing these benefits will not be easy. A major issue is infrastructure and digital literacy. Many African regions still lack reliable electricity, or internet only 43% of Africans have consistent power. And mobile internet is costly. While smartphone use is growing, projected to reach 88% by 2030, today, only about a quarter of Africans use mobile internet. Rolling out CBDC payment systems requires smart devices or special cards and point-of-sale readers, far from ubiquitous in many markets. Local regulators and citizens would need training and trust in new technology.
Another concern is monetary sovereignty. If trade and finance shift into e-CNY, African governments could lose some policy space. For instance, settling a large share of trade in foreign CBDCs or tied currencies could weaken local currencies or make countries more vulnerable to external shocks and policy decisions like Chinese interest rates. Some African policymakers worry about “digital dollarization,” here, a form of “digital yuanization” that might undermine local currency use.
There are also geopolitical and regulatory dimensions. Western governments are wary of China’s new payment system. The U.S. has effectively used SWIFT to enforce sanctions on countries like Russia or Iran; a viable e-CNY network could allow sanctioned actors to evade these restrictions. Analysts note Beijing’s interest in creating a backup to SWIFT precisely because many countries are “wary of U.S. financial sanctions,” African governments must weigh how embracing e-CNY fits with their other diplomatic ties and potential pressure from the EU/U.S.
Furthermore, data privacy and surveillance issues. China’s CBDC is designed to allow deep monitoring of transactions, which raises concerns about control. The PBOC assures that e-CNY collects less transaction information than traditional electronic payment unless laws require sharing, but critics in the West call it a tool for state monitoring. Finally, moving to any CBDC requires strong cybersecurity and anti-fraud controls; African central banks may need time to build the expertise to manage these risks.
3. Case studies and pilots
To date, there are few real-world trials of e-CNY in Africa. Most CBDC cross-border tests have been in Asia and the Middle East. However, China has explicitly targeted Africa for future expansion. For example, Huawei has begun embedding the e-CNY wallet in its smartphones, and Chinese banks like the Bank of China have overseas branches that could eventually use e-CNY with African partners.
On the multilateral front, Project mBridge (China, Thailand, UAE, Hong Kong, Saudi Arabia) has involved African central banks as observers, and in mid-2024, it reached a “minimum viable product” for multi-CBDC settlements. In practical trade, some African traders have begun pricing deals in RMB, and countries like Angola and Zambia already use RMB as a de facto currency for certain transactions. Angola even makes oil payments in yuan.)
In December 2023, China’s Bank of China achieved the first cross-border e-CNY settlement in commodities (gold). Domestically in Africa, central banks are piloting their own digital money too: Nigeria launched the e-Naira in 2021 (with limited success), Ghana is testing an “e-Cedi” wallet, and South Africa has studied a wholesale CBDC. These experiments underline the continent’s interest in digital currencies, although in practice, none has yet been extensively linked to China’s system.
4. Expert and institutional views
Major institutions see both promise and caution. The IMF notes that African CBDCs could enhance inclusion and lower remittance costs, but stresses careful design and cooperation. It highlights that Sub-Saharan Africa suffers the world’s highest cross-border remittance costs (8%), and that CBDCs could slash those by removing intermediaries.
African Union and trade officials emphasize local solutions: AfCFTA Secretary-General Wamkele Mene points out that Africa’s new Pan-African Payment and Settlement System (PAPSS) can already save the continent up to $5 billion a year in fees by bypassing the dollar. Over 110 African banks and 15 central banks have joined PAPSS, and Mene argues it will help African currencies compete with the USD and reduce external dependency.
The Afreximbank, which built PAPSS, also suggests similar annual savings. As for the digital yuan, IMF analysts generally see it as a complement rather than rival to African CBDCs. They note African central banks are “in the pilot phase” of their own projects (Nigeria’s, Ghana’s, South Africa’s, etc.) and caution against jumping directly to the e-CNY without strong safeguards. The IMF survey of African central banks underscores the need for collaboration on tech and policy, and warns against neglecting privacy, cybersecurity, and financial stability
Conclusion
China’s digital yuan is poised to become a major factor in global payments. Its rapid rollout and focus on cross-border use from Asia to the Middle East and potentially Africa could help reshape how money moves. For Africa, the e-CNY offers potential gains: cheaper, faster trade settlements; reduced dollar dependence; and new digital finance tools. But these come with hurdles of infrastructure, governance, and geopolitics.
African governments and businesses will need to weigh the benefits of linking up to China’s digital currency against concerns about dependency and control. Meanwhile, African institutions are investing in their own payment innovations (like PAPSS and local CBDCs) to ensure the continent remains in charge of its economic destiny. In sum, the digital yuan could be a bridge to easier China–Africa commerce, but only if built carefully and in Africa’s interests.
China leads the global CBDC race and is integrating the digital yuan into trade. Africa is deeply tied to China through trade and investment, making the e-CNY a logical next step for some cross-border payments. As for now, no large-scale digital yuan projects are yet live in Africa, but trials elsewhere (Asia, the Gulf) show its promise.
African policymakers and institutions (IMF, AfCFTA, etc.) advocate cautious exploration: they see CBDCs as a way to lower costs and boost inclusion, but emphasize the need for local control and resilience. In short, the e-CNY could power new China–Africa ties, but African priorities and partnerships must drive its adoption.