In a bold move to assert African economic independence, Kenya’s President William Ruto has called on fellow African leaders to take the first steps towards ditching the dominant US dollar.
Dr. Ruto urges African nations to join the Pan-African Payments and Settlement System (PAPSS), a regional initiative launched in January 2022 by the African Export-Import Bank (Afreximbank) and the African Continental Free Trade Area (AfCFTA) Secretariat.
At a forum on AfCFTA in Nairobi, Dr. Ruto expressed the challenges faced by African nations when making cross-border payments, burdened by differences in currencies and the reliance on the dollar. He proposed that traders should be able to conduct business in local currencies, leaving the task of currency exchange to Afreximbank.
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Currently, African traders and local banks rely on correspondent banks in the US and Europe to facilitate transactions between African currencies, mostly in dollars and sometimes in euros. This process incurs high costs and takes several days for payments to reach the recipient’s bank.
The scarcity of US dollars has been a pressing issue for importers in Kenya, such as oil marketers and manufacturers. The shortage has strained relations with suppliers and led to inflated prices for essential inputs, exacerbating the country’s high-inflation environment.
President Ruto emphasized the need for a unified payment platform to eliminate complications, reduce costs, and prevent unnecessary currency fluctuations. He cited the recent fuel shortage in Kenya, which was initially attributed to cash flow challenges but was later revealed to be an artificial exchange rate issue.
By embracing a pan-African payments system, African nations aim to foster regional trade and economic growth while reducing reliance on external currencies.
President Ruto’s call for unity in embracing this transformative initiative marks a significant step toward financial autonomy and economic stability for the continent.
As Africa reimagines its economic landscape, the journey toward a dollar-free future beckons, promising a new era of prosperity and self-sufficiency.
