Zambia has made history by becoming the first African country to accept the Chinese yuan for the payment of mining taxes, marking a significant shift in how resource-rich economies manage fiscal policy. The move reflects a broader continental trend toward currency diversification as governments seek to reduce reliance on the US dollar, strengthen economic sovereignty, and better align revenue systems with evolving trade partnerships.
Across Africa, traditional dollar-based fiscal frameworks are increasingly seen as limiting for commodity-dependent economies exposed to currency volatility and external shocks. In response, governments are exploring monetary pluralism—diversifying the currencies used in trade and revenue collection—to enhance resilience, manage risk, and modernise institutional capacity. Zambia’s decision goes beyond a simple payment adjustment and signals deeper policy reform aimed at improving fiscal efficiency and strategic autonomy.
The acceptance of the yuan for mining taxes is particularly significant given Zambia’s strong trade relationship with China, which accounts for approximately 45% of the country’s export destinations, largely through copper. By allowing mining companies—many of them Chinese-owned or China-facing exporters—to settle taxes directly in yuan, Zambia reduces transaction costs, eases pressure on foreign exchange reserves, and aligns fiscal inflows more closely with trade realities.
Implementing a multi-currency tax collection system requires extensive regulatory and institutional readiness. In Zambia’s case, the legal foundation is supported by constitutional fiscal authority, the Banking and Financial Services Act of 2017, and amendments within the tax framework that allow for non-traditional currency settlements. The Bank of Zambia’s confirmation of yuan acceptance demonstrates coordinated preparedness across monetary, regulatory, and revenue authorities.
Compliance and oversight remain central to the system’s credibility. Yuan-denominated transactions are subject to the same anti-money laundering and financial intelligence standards as dollar-based payments, including enhanced due diligence, reporting thresholds aligned with Financial Action Task Force guidelines, and real-time transaction monitoring. These safeguards ensure transparency and maintain alignment with international financial regulations.
Economic considerations are a key driver behind the policy. Traditional dollar-to-local-currency conversion chains often add 2–4% in transaction costs. Direct yuan settlement removes one conversion layer, potentially reducing costs by up to 2%. For a copper export base valued at an estimated USD 5–6 billion annually, this could translate into savings of USD 45–90 million. At the same time, reduced dependence on the dollar helps ease pressure on the Zambian kwacha and supports reserve management amid ongoing currency depreciation and debt-servicing demands.
From a risk perspective, direct yuan settlement also offers partial insulation from commodity price cycles. During downturns, falling copper prices typically shrink export earnings, weaken reserves, and trigger currency depreciation. Yuan-based settlements provide an alternative buffer, particularly when Chinese demand remains relatively stable despite price fluctuations.
Operationally, the shift requires significant adaptation by both the central bank and the Zambia Revenue Authority. Systems must support real-time exchange rate determination, yuan reserve management, automated conversion tracking, and detailed audit trails. Designated custodial accounts, currency concentration limits, and structured settlement timelines help mitigate liquidity and concentration risks.
Bilateral economic relations further underpin the policy. China’s role as Zambia’s largest copper buyer and a major investor in the mining sector naturally supports yuan-denominated fiscal arrangements. These are reinforced through currency swap agreements, investment protection frameworks, and technical cooperation on financial systems. However, authorities remain mindful of geopolitical and concentration risks, emphasising the need for diversification and contingency planning.
Importantly, Zambia’s approach remains selective. The yuan is currently accepted specifically for mining taxes and royalties, preserving broader monetary sovereignty and avoiding wholesale restructuring of the national currency system. This targeted model offers a potential blueprint for other African nations considering similar reforms without undermining central bank independence.
Looking ahead, Zambia’s move may influence regional and continental monetary policy discussions, including within the Southern African Development Community. Reduced dollar dependence enhances bargaining power in global trade negotiations and opens pathways for deeper South-South financial cooperation.
For other African countries evaluating similar policies, careful assessment is essential. Trade concentration levels, legal flexibility, central bank capacity, political consensus, and existing bilateral frameworks must all be considered. A phased implementation—starting with high-concentration sectors such as mining—offers a pragmatic pathway.
Zambia’s adoption of the yuan for mining taxes represents a landmark moment in Africa’s evolving fiscal landscape. It highlights how resource-dependent economies can rethink traditional monetary dependencies to improve resilience, reduce costs, and assert greater control over their economic futures.
