Africa is emerging as fertile ground for Beijing’s drive to make the yuan a major international currency and reduce reliance on the US dollar, as an increasing number of financial institutions deepen their integration with China’s payment network.

Following talks in Beijing between Central Bank of Libya Governor Naji Issa and People’s Bank of China Governor Pan Gongsheng last month, the country’s banks are set to join China’s Cross-Border Interbank Payment System (CIPS), an alternative to the Society for Worldwide Interbank Financial Telecommunication (Swift) system.

The move will facilitate direct yuan interbank payments for trade. According to the state-run Libyan News Agency, joining the network will streamline commercial transactions, accelerate cross-border transfers and boost trade flows.

Libya also plans to tap into China’s capital market by issuing panda bonds – yuan-denominated debt sold by foreign entities in mainland China – which could help fund the country’s reconstruction following years of conflict.

Other African lenders that have connected to CIPS include continentwide lender African Export-Import Bank and South Africa’s Standard Bank, Africa’s largest bank.

In January, Zambia started collecting taxes and royalties from Chinese mining firms in yuan, channelling the currency back to Beijing to fund imports and service loans.