For years, debates about the future of global finance have circled the same question: can any currency challenge the dominance of the US dollar? Now, a quiet but telling shift in East Africa has reignited that conversation. Kenya has just made a move few expected — and though it came without fanfare, its symbolism is impossible to ignore. In geopolitical terms, it is the sort of moment that whispers before it echoes.
Kenya turns to the yuan: a strategic and financial calculation
Kenya recently opted to convert a portion of its external debt from dollars into Chinese yuan, marking the first time an African nation has settled a major public loan in Beijing’s currency. The amount is substantial: 5 billion dollars in financing for the Mombasa–Nairobi railway, one of the region’s most ambitious infrastructure projects.
But the decision was not solely about diplomacy. Nairobi had grown increasingly uneasy about its exposure to a single currency. With interest rates rising globally, the cost of servicing dollar-denominated loans was becoming punishing. By switching to the yuan, Kenya expects to save around 215 million dollars a year, helped by interest rates hovering near 3 percent. For a country whose debt has doubled over the past decade, such relief is more than welcome.
Still, the financial benefits tell only part of the story. Choosing the Chinese currency sends a deliberate message: African states are willing to diversify their monetary ties at a time when Beijing is pouring more than 50 billion dollars into transport projects across the continent.
China’s paradox: economic giant, monetary lightweight
China may be the world’s second-largest economy, but its currency remains a modest player in global finance. According to the International Monetary Fund, the yuan accounts for barely 2 percent of world foreign-exchange reserves. By comparison, the dollar retains about 57 percent, while the euro sits at 20 percent.
Why the disparity? Beijing still tightly controls capital flows. Foreign investors face constraints on purchasing government bonds, and the yuan is not fully convertible. Add to that a heavily state-driven economy – 85 of the country’s 135 biggest firms are publicly owned – and it becomes clear why central banks tend to view the dollar and euro as easier, more predictable instruments. Their defining strength lies in freedom of exchange, a quality the yuan has not yet fully achieved.
The “Tianjin bloc”: an emerging counterweight
A photograph that circulated widely this year captured a symbolic moment: Xi Jinping standing alongside leaders of India, Russia, Iran, Egypt, Brazil and others gathered in Tianjin. While the grouping has no official status, it represents a coalition of nations seeking to recalibrate global influence and loosen the dollar’s hold over international trade.
China’s central bank governor, Pan Gongsheng — a Harvard-trained economist — has openly called for a multipolar monetary system less reliant on a single currency. Countries in this informal “Tianjin bloc” currently hold more than 40 percent of the world’s dollar reserves. A modest shift of even 3 to 5 percentage points toward the yuan could raise China’s share of global reserves to around 6 percent, putting it in line with the yen or the pound. Such a jump would carry undeniable geopolitical weight.
Beijing opens the door wider
China is already laying the foundations for a broader role in global finance. It has expanded currency swap agreements across Southeast Asia and strengthened cooperation with the European Central Bank. Shanghai has also launched a new international hub dedicated to the digital yuan, aimed at smoothing cross-border payments and encouraging adoption.
Piece by piece, Beijing is building the scaffolding for a financial ecosystem where trade, borrowing and investment can take place independently of Western markets.
Russia’s move: a sign of what comes next?
Another milestone is fast approaching: Moscow plans to issue its first yuan-denominated government bonds this December. Cut off from Western capital markets since 2022, Russia now relies heavily on China’s financial channels, using surplus yuan from energy exports to fund domestic spending.
Who will buy these bonds? Likely Chinese and Asian investors — and perhaps other members of the emerging Tianjin alignment. If the issuance succeeds, it could encourage other countries in the Global South to follow suit, accelerating a slow but noticeable push toward de-dollarisation.
The world’s financial architecture rarely changes overnight. But shifts begin with moments like this: a Kenyan railway loan quietly rewritten in a different currency. For China, the symbolism is priceless. For the rest of the world, it is a sign that the question is no longer whether the yuan will rise — but how far, and how fast.
