Africa’s $5 Billion Annual Loss: The Hidden Cost of Foreign Currency Trade

Africa loses approximately $5 billion annually by conducting trade in foreign currencies, particularly the US dollar, according to Dr. Melaku Geboye Desta of the African Trade Policy Centre.

This reliance on non-African currencies increases transaction costs, delays trade settlements, and exposes African economies to currency rate instability. To address this issue, the continent has developed the Pan-African Payment and Settlement System (PAPSS), which functions without intermediate currencies, potentially making intra-African trade faster, cheaper, and more competitive. Several African countries are now also considering using local currencies for business with non-Western partners like China and Russia.