African financial institutions and regional blocs are developing payment systems aimed at reducing reliance on the US dollar for intra-African trade and settlements. For decades, most cross-border trade involving African businesses has relied heavily on the US dollar, even in cases where neither side of the transaction was American. A company in Zambia buying goods from Kenya could still find itself converting local currency into dollars before the payment eventually reached its destination. The process became so normal that few questioned it. That may slowly be starting to change.
Over the past two years, several African financial institutions, regional blocs and commercial banks have introduced systems designed to reduce the need for dollar-based settlement in certain types of transactions, particularly regional trade within Africa itself. The broader discussion around foreign exchange access has also become more visible beyond institutional banking circles. In countries dealing with periodic currency pressure and fluctuating exchange rates, interest in forex trading services has grown among businesses and retail participants looking more closely at how global currency markets affect local economies.
The shift is not dramatic enough to suggest that the dollar is losing its global dominance. The US currency remains central to international trade, commodities, reserves and global finance. But there is increasing evidence that African policymakers and financial institutions are trying to reduce what they see as unnecessary dependence on external currencies for intra-African commerce.
Key Initiatives in Regional Payment Systems
One of the clearest examples came in late 2025 when the Common Market for Eastern and Southern Africa (COMESA) launched a Digital Retail Payments Platform intended to allow businesses and individuals to settle some cross-border transactions directly in local currencies. According to Reuters, the first implementation linked Zambia and Malawi, with officials arguing that small and medium-sized enterprises could benefit from lower transaction costs and faster settlement times. SMEs account for a substantial share of employment across the region, making payment efficiency more than simply a technical banking issue.
The Pan-African Payment and Settlement System, known as PAPSS, is pursuing a similar objective on a broader continental scale. Backed by Afreximbank and linked to the African Continental Free Trade Area, the system aims to simplify payments between African countries without routing transactions through overseas correspondent banks. In practical terms, supporters argue that this could reduce delays, foreign exchange costs and pressure on dollar reserves.
The logic behind these efforts is relatively straightforward. Much of Africa's cross-border payment infrastructure was historically built around external financial centres. Even trade between neighbouring African countries often depended on banking relationships outside the continent, usually involving conversion into dollars, euros or pounds before final settlement. The International Monetary Fund has acknowledged this issue in previous research, estimating that transaction frictions tied to currency conversion and correspondent banking structures cost African economies billions of dollars annually.
Broader Economic Motivations
There are also broader economic reasons why governments and regional institutions are paying closer attention to the issue now. Many African economies continue to experience periodic dollar shortages, exchange-rate volatility and rising import costs during periods of global financial tightening. When the Federal Reserve raises interest rates or global investors move toward safer assets, emerging markets often face immediate pressure on local currencies. Reducing some dependence on external currencies for regional trade is therefore increasingly viewed as a way to improve resilience, particularly during periods of financial stress.
At the same time, China's expanding commercial role across Africa is beginning to influence parts of the conversation as well. Reuters reported earlier this year that Ecobank has been discussing yuan-based settlement mechanisms with Bank of China to facilitate trade flows between African businesses and Chinese suppliers. Again, the objective appears practical rather than ideological. Businesses trading directly with Chinese manufacturers may see advantages in avoiding multiple currency conversions through the dollar when settling invoices.
Limitations and Challenges
Still, there are important limitations to how far these systems can realistically go. The dollar remains dominant for reasons that extend well beyond payment infrastructure alone. International investors trust dollar liquidity. Major commodities are priced in dollars. Central banks hold substantial dollar reserves. Global trade financing systems are deeply integrated with American financial markets. Replacing that structure entirely would require changes far beyond regional payment technology.
There are also domestic challenges within Africa itself. Not all local currencies are equally stable or easily convertible. Some face inflationary pressure, limited liquidity or restrictions on capital movement. Businesses may hesitate to hold currencies that are difficult to hedge or rapidly losing value. In those cases, the dollar often continues to function as a form of predictability, even when transaction costs are higher.
Financial infrastructure also remains uneven across the continent. Cross-border settlement systems require regulatory coordination, strong banking supervision, liquidity support and trust between participating institutions. Building the technical platform is often easier than building long-term confidence in how the system operates during periods of stress. The IMF has also warned that increasing reliance on domestic debt markets without sufficient market depth can create separate financial vulnerabilities, including pressure on local banks and reduced lending to the private sector.
Outlook and Gradual Transition
History suggests these transitions rarely happen quickly. The global financial system has experienced multiple attempts at regional monetary integration over the past century, from post-war currency arrangements to the creation of the euro. In most cases, adoption depended less on political ambition and more on whether businesses and investors trusted the system enough to use it consistently. That may ultimately become the deciding factor in Africa's case as well.
For now, the evidence suggests that African institutions are not attempting to remove the dollar from the continent's economy altogether. What they appear to be building instead are selective alternatives for situations where relying entirely on external currencies has become unnecessarily expensive, slow or inefficient. Whether those systems remain limited experiments or evolve into something much larger will likely depend on factors that extend beyond technology alone, including currency stability, institutional credibility and the willingness of businesses to gradually change longstanding financial habits.
