Africa And BRICS Unite To Destroy Dollar Dominance

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#africanews #dedollarization #brics
Right now, the US dollar is still the world’s reserve currency, used in conducting bilateral trade between countries but hopefully not for long, especially for African countries because they have been at the receiving end of the negative impact of relying on the dollar for trade. Think about it. When European countries, especially those who are members of the European Union, engage in trade with one another, the currency used is not the dollar, but the euro. However, when African countries, say Ghana and Nigeria or Egypt and Tanzania, trade with each other, it's painful to say that the transaction must be settled in the dollar. Even amongst members of regional blocs such as ECOWAS or the East African Community (EAC), that preach about regional integration, transactions are still settled in the dollar. Aside from this, when African countries want to borrow from international organizations or other countries, the loan is usually in the dollar and not the local currency. And, when the loan is to be paid back with interests, it's also in the dollar.

The use of the dollar by African countries for trade has severely affected their ability to cope with internal challenges, because they do not have control over their own monetary policy. According to Ronney Ncwadi, Professor and Director of the School of Economics, Development studies and Tourism at the South African Nelson Mandela University, reliance on the US dollar "brings about the external dependency on the stability and policies of the US financial system." In his own words “When the US sneezes, everybody catches the fever and depending on the US dollar currency exchange rate does dampen the growth in our African continent”. The reliance on the dollar is the reason why the majority of local currencies in Africa are weak and performing poorly, leading to the high cost of living that is now rampant in the African economy. It also makes the African market dominated by commodity products, vulnerable to global economic shocks, leading to inefficient trade.