African nations accelerate shift from US dollar amid tariff turmoil

10:50

By: Dakir Madiha

African nations accelerate shift from US dollar amid tariff turmoil

African governments and banks are stepping up efforts to reduce reliance on the US dollar in trade and financial transactions as uncertainty over American tariffs unsettles global markets. Ecobank Transnational CEO Jeremy Awori told Bloomberg that erratic US trade measures are motivating companies across the continent to settle more deals in China’s renminbi and regional currencies. His comments followed a US Supreme Court decision that overturned President Donald Trump’s previous import duties under the International Emergency Economic Powers Act. Within hours, Trump reinstated a temporary 10 percent tariff using Section 122 of the Trade Act, reigniting trade tensions and shaking international confidence.

Analysts at Commerzbank warned that renewed tariff instability could slow European Union growth by up to 0.7 percentage points annually. Economist Vincent Stamer said the uncertainty could jeopardize the “Turnberry Deal” trade accord between Washington and Brussels agreed in mid-2025. The ripple effects have reached Africa, where policymakers are accelerating plans for financial self-sufficiency.

Kenya’s shilling has stood out as one of the few currencies showing unusual resilience. Data from the Central Bank of Kenya indicates it has traded between 128 and 130 per dollar for 18 months, with volatility among the lowest globally. The currency’s steady performance follows a sharp depreciation in 2023 and is supported by improved monetary discipline and rising investor confidence.

Meanwhile, financial integration efforts are gaining momentum. Ecobank recently signed an agreement with Bank of China (Mauritius) to expand trade financing and renminbi clearing across its network. Zambia has started collecting mining taxes in yuan, while Kenya converted part of its Chinese debt into the same currency. Ethiopia is reportedly negotiating similar arrangements. The Pan-African Payment and Settlement System, now adopted by the African Union for the African Continental Free Trade Area, connects over 150 banks across 19 nations, allowing trade to be settled in local currencies.

The shift comes as Chinese-African trade surpassed $300 billion in 2025. Beijing announced plans to remove tariffs on imports from 53 African countries starting May 2026, contrasting with Washington’s decision to extend the African Growth and Opportunity Act for just one year, maintaining significant reciprocal duties. According to Awori, these developments highlight an urgent need for African states to increase intra-continental trade and diversify away from US-linked monetary risks.