Kenyan President William Ruto has urged African leaders to embark on moves towards ditching the US dollar.
According to the Kenyan president, this can be achieved if the leaders of the African continent mobilize central and commercial banks to join the Pan African Payments and Settlement System (PAPSS), which was developed by African Export-Import Bank (Afreximbank) and AfCFTA Secretariat.
"I suggest that we have a mechanism where we can settle all our payments, whether between our countries or externally, using our [local] currencies. And we have a mechanism like the one that has been put up by the Afreximbank so that we don’t have to be hostage to any one currency," Ruto said.
The Kenyan leader also noted that currency differences and "subjection to a dollar environment" hinder payments for goods and services between African countries.
"We do not have to look for dollars; our businessmen will concentrate on moving goods and services, and leave the arduous task of currencies to Afreximbank," President Ruto emphasized.
Kenyan importers have lamented the huge mismatch between supply and demand for US dollars since last year, forcing them to buy the greenback in batches and at prices well above the official exchange rate.
The Kenya Association of Manufacturers, for example, said last year that the dollar crunch exacerbated relations with suppliers at a time when competition for raw materials intensified because of growing demand amid continued supply chain constraints.
According to Mike Ogbalu III, the PAPSS chief executive officer's statement in 2022, over 80% of intra-African payments go through Europe or the US, resulting in high transfer and compliance costs.
PAPSS was adopted in July 2019 in Niamey, Niger, by the African Union's heads of state as the payment and settlement system to support the implementation of AfCFTA. The initiative was backed by the African Union and African central banks.