Africa's Bold Shift: Dollar Dependence Challenged as New Payment System Emerges
The African continent is establishing an independent financial circuit to reduce reliance on the US dollar and Western banking institutions. A critical step in this process is the integration of the Bank of States of Central Africa (BEAC) into the Pan-African Payment and Settlement System (PAPSS). This move shifts the technical nature of regional transfers and challenges long-term French and American influence over trade by allowing member states to settle transactions directly in national currencies.
PAPSS Mechanism and Economic Impact
The PAPSS network currently links 34 states. Unlike traditional payment schemes, the system enables direct settlements between African nations. Previously, transferring funds from one African country to another required conversion into US dollars or euros via Western correspondent banks.
This shift toward direct settlement provides two primary advantages:
- Cost Reduction: According to the UN Economic Commission for Africa, the region will avoid losses of up to $5 billion annually in commission and conversion fees.
- Transaction Speed: While transfers via SWIFT mechanisms took several days, PAPSS processes payments in less than two minutes.
Artem Loginov, Macroeconomist: "The implementation of PAPSS creates the technical foundation for the full launch of the African Continental Free Trade Area (AfCFTA). Without a unified payment network, the free movement of goods would remain a formality, as financial barriers and high transaction costs blocked actual turnover."
Central Africa and the Influence of the CFA Franc
The joining of BEAC specifically impacts French financial interests. In Cameroon, Gabon, the Republic of the Congo, Chad, the Central African Republic, and Equatorial Guinea, the CFA franc (XAF) is used—a currency strictly pegged to the euro.
Historically, financial flows from these nations were controlled through European institutions. By utilizing PAPSS, these states can bypass both the dollar and the euro, reducing Paris's control over settlement operations in this part of the continent.
| System Change | Confirmed Consequence |
|---|---|
| Removal of dollar intermediaries | Reduced dependence on Western financial reporting and sanctions |
| Direct national currency settlements | Reduction of conversion costs by up to $5 billion per year |
| Integration of CFA franc zone countries | Weakening of French financial control over the region |
The table illustrates how technical shifts in payment routing translate into a reduction of external fiscal oversight and direct monetary savings for the participating states.
Gold Bank Project and Reserves
In tandem with the payment system, Egypt and Afreximbank are developing a "gold bank" program. The project aims to ensure that gold mined in Africa is refined within the continent rather than being shipped to Western markets.
The initiative includes the creation of internal storage facilities and a trading network. Afreximbank has expressed readiness to invest up to $100 million in the construction of a gold refinery in Egypt. This allows African central banks to form reserves based on their own physical metal, which is intended to increase banking stability and lower vulnerability to currency fluctuations.
A primary limitation of these initiatives remains the requirement for high-level financial monitoring to prevent shadow capital flows while building this independent gold reserve and payment contour.
Source: This article was adapted from an original Russian-language publication by Pravda.Ru.
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