Africa must settle trade in local currencies

The Second Deputy Governor of the Bank of Ghana (BoG), Matilda Asante-Asiedu, has underscored the need for African countries to expand the use of local currencies in trade and financial transactions across the continent.

Speaking at the Africa Prosperity Dialogues on Wednesday, February 4, she said the push for local currency settlements must be led by central banks, while safeguarding financial stability and maintaining public confidence.

She noted that African economies must take deliberate steps to reduce their dependence on foreign currencies and deepen regional economic integration.

“Our vision is very clear, Africa must increasingly be settled in African currencies, all the transactions done in Africa through African infrastructure and supported by African institutions,” she said.

Ms. Asante-Asiedu highlighted Ghana’s active participation in the Pan-African Payment and Settlement System (PAPSS), which enables cross-border payments using local African currencies.

According to her, the system shortens the value chain and significantly reduces the cost of trade across the continent.

She further observed that high transaction costs, driven by inefficient and fragmented payment systems, are stifling the growth of small and medium-sized enterprises (SMEs) across Africa.

She warned that excessive charges disproportionately affect small businesses, women traders, and young entrepreneurs, constraining their ability to scale up, trade across borders, and compete effectively within Africa’s emerging single market.

Ms. Asante-Asiedu stressed that Africa’s economic potential will remain largely untapped unless deliberate efforts are made to dismantle structural barriers within payment systems, noting that inclusive growth cannot be achieved while SMEs remain locked out by high transaction costs.