The dominance of the United States dollar as a settlement currency in Africa is being challenged by emerging payment methods in financial technology and by native African fiat currencies. In the four years to 2017, fewer people in the continent of 1.2 billion transacted via the US dollar than they did with their local currencies or mobile money, and perhaps cryptocurrency.
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Digital Transactions Rise As US Dollar Slowly Loses Its Hegemony
At one time gold was the world’s most preferred currency before it was replaced by paper money. After World War II, the United States dollar became the backbone of the world’s reserve currency system due to its strength and stability. But that is beginning to change.
According to a new report by SWIFT, the USD is losing its hegemony as an inter-continental, cross-border settlement currency in Africa. The use of the US dollar has dropped as a share of payments from Africa from 50% in 2013 to 45.1% in 2017, it says.
More people are switching to local currencies, and some others to mobile money, for cross-border payments. Payments in the West African franc – used by 8 countries – increased from 4.4% in 2013 to 7.3% in 2017 while transactions in the South African rand – used mostly in Southern Africa – rose to 7.2% from 6.3%.
The report, which maps commercial payment flows against financial flows in Africa, highlighted that since 2014, the percentage of Sub-Saharan Africans with traditional financial accounts has not changed.
But the percentage of mobile money users has doubled, to
