Africa’s Race to Break Away From Dollar Stranglehold

Conrad Onyango

Africa’s push to break free from the dollar’s grip is gaining momentum as experts pile pressure for adoption of local currencies in trade and the continent moves closer to establishing own local currency marketplace.

At the recent 57th Conference of African Ministers of Finance, experts underscored the urgent need for African governments to prioritise local currencies for trade, arguing the continent’s heavy reliance on the U.S. dollar has led to significant economic vulnerabilities.

UN Economic Commission for Africa Chief Economist, Hanan Morsy, said developing a Pan-African payment systems would be a game changer for intra- Africa trade and implementation of Africa’s single largest market.

“This is really critical. It’s estimated actually that this can yield more than 5 billion U.S. dollars a year in terms of lower cost of trade,” Morsy told finance ministers in the conference.

Cutting down dollar dependence, she said, would shield African economies from external financial shocks especially when countries face foreign exchange shortages that could prevent them from trading with one another.

“You can do the trade in local currencies using such payment system because in a lot of cases actually its the private sector players that are held hostage because of these issues with their goods staying in ports or in storages while they’re waiting for the payment to be processed and incurring a lot of expenses,” explained Morsy.

Nigeria’s former Vice President, Yemi Osibanjo, said a major constraint for intra African trade has been the inability to trade in local currencies but he expressed confidence the establishment of the Pan African Payment and Settlement System (PAPSS) would solve the problem.

“The PAPSS must be fully operational across all member states, allowing businesses to trade in local currencies without conversion costs,” Osibanjo said.

Piloting of the Africa Currency Marketplace by the Pan-African Payments and Settlement System — backed by 15 central banks on the continent – began in March 2025 and is expected to go live later this year.

The new system is designed to help businesses seamlessly trade across African borders.

PAPSS Chief Executive Officer, Mike Ogbalu, said Marketplace is designed to eliminate the need for intermediary currencies by matching parties looking to swap local currencies directly, through an intelligent, market-driven system.

“The rates will be market-driven, and our system is able to do a matching based on the rates offered by the different participants in our ecosystem,” Ogbalu explained.

Businesses have historically found it difficult to exchange between African currencies, with each party to a transaction required convert into or out of, US dollars, a complex process that leads to delays in transactions and extra expenses.

Nigerian tax expert Olatunji Abdulrazaq posted on X that disconnecting businesses from third-party currencies for cross border trade transactions would solve Africa’s “biggest challenge”.

“The biggest challenge for African businesses has been forex illiquidity, where local currencies are often difficult to convert across borders. This has forced businesses to resort to costly and time-consuming workarounds, often relying on intermediaries that drive up transaction costs,” said Abdulrazaq.

Examples of countries dealing directly and avoiding a US dollar intermediary, have been growing. In mid-2023, Dangote Cement and Ethiopian Airlines established a US US$100 million deal to address foreign exchange limitations caused by systemic flaws in Africa’s trade finance ecosystem.

With US $300 million stuck in Ethiopia due to strict currency regulations, and Ethiopian Airlines encountering US$180 million in repatriation issues from Nigeria at that time, the two major industry players explored the potential opportunities that could arise from deliberate and strategic collaboration.

Additionally, fintech startups like Yellow Card and several countries have deployed local solutions to move away from the dollar stranglehold.

Yellow Card has been at the forefront in leveraging cryptocurrencies to provide cross-border payment solutions — now reportedly processing US $3 billion in transactions across 30,000 African businesses in 20 African countries by the close of  2024.

In March, the fintech startup partnered with a Switzerland fintech company, Centi to allow African migrants in Europe to convert their funds into cryptocurrency and store them in Centi-issued non-custodial wallets before sending money to African countries where recipients in supported countries will receive the payment in their preferred local currency.

“This partnership transforms remittances from Switzerland to Africa by eliminating hidden costs and high exchange rates,” said Yellow Card Chief Executive Officer and Co-founder, Chris Maurice.