Dedollarization is accelerating in Africa

A pan-African payment system that would allow African nations to trade with each other, using their own currencies, has gained momentum, Bloomberg TV reported.The African Export-Import Bank, also known as Afreximbank, expects 15 to 20 countries to have joined the pan-African payment and settlement system by the end of the year, said Afreximbank Governor Benedict Oramah during an interview ahead of the annual meetings in Ghana's capital, Accra, to be held on June 21.

The platform has started trading operations with nine countries registered so far, he said.The new system, known as BAPS, currently uses dollar exchange rates, Oramah said.Note that the bank of Afreximbank finances the BAPS system."We are working with central banks to develop an exchange rate mechanism that allows the 42 African currencies to be convertible with each other," he said.

The vast majority of Africa's intra-regional trade is done through dollar conversions. Initiatives such as BAPS and the African Continental Free Trade Agreement, which would create the largest free trade area in the world, aim to boost internal trade by reducing barriers, including the need for intermediaries such than the US dollar.

According to Bloomberg, it is not just Africa that is seeking to end its dependence on the US dollar. There have been de-dollarization pushes in emerging markets, including India's efforts to use its national currency, the rupee, for international trade.

In this line, it should be noted that Malaysia has started talks with China to create an Asian Monetary Fund with the aim of dissociating itself from the dollar.This comes as Brazil and Argentina have considered creating a common currency, dubbed "Sur", to facilitate regional trade and reduce their dependence on the US dollar.