Introduction

African countries are working on a new system of payments and settlements among themselves, trying to mitigate the impact of the weakness of their currencies and the shortage of the dollar in these countries.

The new Africa Payments and Settlement System is designed to facilitate cross-border payments in national currencies to reduce the pressure on these countries to provide dollars in domestic trade and was launched in November 2021 and funded by the African Import and Export Bank.

Commercial Expansion

The platform has gone commercial in 9 countries and is expected to have 15 to 20 countries joining by the end of this year.

Exchange Rate Mechanism

The system currently uses the dollar exchange rate, but work is underway with central banks to develop an exchange rate mechanism that would allow the exchange of 42 African currencies among themselves.

“The platform is trying to overcome difficulties in providing dollars in African countries, but it needs time to bear fruit,” said Dr. Yashri El-Sharqawi, head of the Egyptian-African Businessmen Association.

Reducing Dependency on the US Dollar

Africa is looking for ways to break its dependence on the US currency, but this path is still in its infancy, especially with the maintenance of the US dollar as the settlement currency in trading exchanges at the international and continental levels.

“Right now the exchanges are very low, between 15% and 17% depending on the stats, but one of the most important things we are trying to do is that anyone using this platform is facing issues of not being able to access trading information and markets. Because many people don’t know where they can buy their goods, where they sell and what are the rules of trade. This platform provides an opportunity to come and chat with buyers, sellers and investors.”

Increasing Internal Trade

Despite the infrastructure difficulties of the African continent and the weakness of many of its currencies in circulation, the payment and settlement platform in Africa represents an ambitious step towards increasing internal trade between the countries of the continent and achieving the goal of breaking the hegemony of the dollar among them.