Kenya’s President, William Ruto, a firm advocate for local currency reliance in Africa, intensifies his campaign against the dollar. The message is clear: it’s high time African nations abandon the use of the currency in cross-border trade and embrace their national currencies.
Afreximbank: A tool for currency liberation
Ruto’s conviction is not just theoretical but based on existing continental infrastructure, the African Export-Import Bank (Afreximbank). The bank offers a system enabling smooth financial exchanges between traders within Africa.
While this mechanism provides the basis for a continental economic integration, it also forms the cornerstone of Ruto’s de-dollarization campaign.
The president argues that this shift would simplify trade, eliminating the need for African traders to seek dollars before completing transactions. His argument bears weight, given the common scarcity of dollars in several African economies, including Kenya.
This condition presents an additional hurdle for African traders and impedes intracontinental trade.
Notably, Ruto’s call for de-dollarization doesn’t stem from animosity toward the currency. Instead, it’s a move toward economic independence and facilitation of trade.
The essence of his campaign is encapsulated in a poignant rhetorical question he posed during his speech at the Djibouti parliament, “Why should transactions between Kenyan and Djibouti traders hinge on the dollar?”
Global implications of de-dollarization
The implications of a continental move away from the USD would extend beyond African shores, a point highlighted by internet freedom advocate and entrepreneur Kimdotcom.
If more nations, especially those within a continent as vast as Africa, reject the dollar, the consequences for the US could be significant.
As Kimdotcom notes, a major fallout could be an increase in inflation in the US. The theory follows that as fewer countries hold the dollar as a reserve currency, the cost to the US government for printing money would rise, potentially causing inflation.
While Ruto’s campaign against the USD is gaining traction, it’s important to remember his aim isn’t a total rejection of the US currency.
Instead, he advocates for a system where the currency is used primarily for transactions involving the US. Essentially, his vision is for African nations to “pay in dollars what we are buying from the US.”
In conclusion, President Ruto’s stance isn’t a veiled attack on the dollar. Rather, it’s a call for Africa to harness existing mechanisms like Afreximbank to boost intracontinental trade.
While the economic consequences for the US remain hypothetical, the push for de-dollarization is a clear sign of Africa’s drive toward economic independence.
As the continent continues to grow, the world watches to see if others will join this campaign, and what impact, if any, it will have on the dollar.
