|Source! Today News Africa Channel|
In a recent statement, Kenya’s President, Uhuru Kenyatta, called for African nations to ditch the US dollar for trade settlements. This move is seen as a step towards economic independence and a means to promote intra-African trade. The President’s statement raises questions about the role of the US dollar in trade between African countries, such as Kenya and Djibouti, and the need for a shift in the current trading system.
The Role of the US Dollar in African Trade
The US dollar has long been the dominant currency for international trade, including trade between African nations. This is due to its stability and global acceptance, making it a preferred choice for settling trade transactions. However, this reliance on the US dollar has its drawbacks, as it exposes African countries to currency risks and fluctuations in the global market.
In the case of trade between Kenya and Djibouti, the use of the US dollar means that both countries need to acquire the currency to settle their transactions. This can lead to additional costs and complications, as well as a dependency on the US financial system. Moreover, it can also hinder the growth of intra-African trade, as countries may find it more attractive to trade with partners that use the same currency.
The Call for Change
President Kenyatta’s call for African nations to ditch the US dollar for trade settlements is not an attack on the currency itself, but rather a push for economic independence and the promotion of intra-African trade. By using a common African currency or adopting a system of bilateral currency swaps, African countries can reduce their reliance on the US dollar and promote trade within the continent.
This move would also help to strengthen regional economic integration and foster the development of local industries. It would enable African countries to trade more freely, without the constraints imposed by the need to acquire US dollars for trade settlements. Furthermore, it would help to insulate African economies from global financial shocks and currency fluctuations, thus promoting stability and growth.
The Way Forward
While the idea of ditching the US dollar for trade settlements is gaining traction among African leaders, it is important to acknowledge the challenges that lie ahead. Implementing a new system for trade settlements will require significant cooperation and coordination among African countries, as well as the development of robust financial infrastructure to support the change.
In addition, African countries will need to work together to promote the use of their local currencies and build trust in their stability and value. This may involve the establishment of a common African currency, similar to the Euro, or the adoption of a system of bilateral currency swaps between countries.
The call by Kenya’s President for African nations to ditch the US dollar for trade settlements is a bold move towards economic independence and the promotion of intra-African trade. By reducing their reliance on the US dollar, African countries can foster regional economic integration, support the growth of local industries, and insulate themselves from global financial shocks. However, the success of this initiative will depend on the willingness of African nations to cooperate and work together towards a common goal.