Africa could save up to $5 billion each year by using its own currencies, such as the Nigerian naira, Ghanaian cedi, or South African rand, for intra-continental trade, instead of relying on the US dollar. This shift, championed by the Pan-African Payments and Settlement System (PAPSS), marks a significant move towards homegrown financial independence and lower trade costs across the continent.
Although not aimed at de-dollarisation, the initiative is designed to address the steep financial burden African nations face due to dollar-denominated transactions. Mike Ogbalu, CEO of PAPSS, explained that the move is primarily about economic efficiency, not geopolitics. “Our goal… is not de-dollarisation,” he said. “African economies struggle with the availability of third-party global currencies to settle transactions.”
Currently, African commercial banks rely on costly correspondent banking relationships abroad, even for payments between neighbouring countries. These systems can inflate transaction costs by up to 30% on a $200 million trade deal. PAPSS, in contrast, enables payments between African businesses in their respective national currencies, such as a Zambian importer paying a Kenyan exporter, at just 1% of the transaction cost.
Launched in January 2022 with 10 banks, PAPSS now operates in 15 countries, including Zambia, Kenya, Malawi, and Tunisia, and has enrolled 150 commercial banks into its network. While exact usage figures haven’t been disclosed, Ogbalu noted that transaction volumes are growing steadily.
This new payments infrastructure reflects broader global trends. China, Russia, and BRICS nations have all pushed for trade systems independent of the dollar. Africa’s approach, however, has a strong economic justification: local currency payments make trade cheaper, reduce reliance on scarce foreign exchange, and empower regional economies.
Still, the move may not be immune to political headwinds. U.S. President Donald Trump, who returned to office this year, has already threatened retaliatory tariffs against nations reducing reliance on the dollar. “There is no chance that BRICS will replace the U.S. Dollar in international trade,” Trump posted on Truth Social, warning countries of 100% tariffs for attempting to bypass the greenback.
Despite these geopolitical tensions, African financial leaders remain focused on practical gains. South Africa, which currently holds the G20 rotating presidency, has prioritised regional payment systems in its agenda. The country hosted a session on this topic at the G20 finance ministers’ meeting earlier this year, and further discussions are expected in July.
“For us to function as a continent, it’s important that we start trading and settling in our own currencies,” said South Africa’s central bank governor Lesetja Kganyago.
The International Finance Corporation (IFC), the private sector arm of the World Bank, is also backing the shift. It has begun issuing loans to African businesses in local currencies to avoid the volatility and risks associated with borrowing in dollars. “If they are not generating hard currency, a hard-currency loan imposes a burden,” said Ethiopis Tafara, IFC’s vice-president for Africa.
Three key policies have helped drive Ghana‘s fintech growth and broader adoption of digital finance: the National Financial Inclusion Development Strategy (NFITS), the Cashlite Roadmap, and the Digital Financial Services Policy. With more than 60 licensed fintech firms in Ghana, more than double the number of commercial banks, Africa’s digital finance ecosystem is rapidly expanding.
Ultimately, while African leaders insist the move away from the dollar is rooted in practical economics, the global political climate may still frame it as part of a larger geopolitical realignment. As Syracuse University professor Daniel McDowell puts it, “The perception is likely to be that this is about geopolitics.”
Mama Africa finally waking up!