Africa Is Building a Financial System of Its Own and the Dollar Is No Longer Always Needed

Africa is quietly building the financial plumbing of a continental economy. PAPSS, new currency markets and regional settlement links are beginning to let African businesses trade without routing every transaction through the dollar or foreign correspondent banks. The system is incomplete, but the direction of travel is becoming harder to miss.

A Nigerian buyer ordering goods from Kenya may never see his cargo leave Africa. Until recently, however, the money paying for it often did.

The buyer has naira. The seller wants Kenyan shillings. Under the old arrangement, the transaction could pass through dollars and correspondent banks outside the continent before returning as local currency at the other end. Fees accumulated. Foreign exchange had to be found. A transaction between two African businesses became dependent on a currency belonging to neither of them.

Africa is beginning to build another route.

Through the Pan-African Payment and Settlement System, or PAPSS, the Nigerian buyer can initiate the payment in naira and the Kenyan recipient can receive local currency. Behind that simple exchange sits a growing network of commercial banks, national payment switches, central banks and Afreximbank, the Cairo-based multilateral institution that has become one of the principal architects of Africa’s attempt to create a continental financial system.

PAPSS now reaches 28 African countries in some form and connects more than 190 commercial banks and fintech companies, together with 16 payment switches. In July, the Bank of Central African States, BEAC, joined, opening the way towards deeper integration of the six countries of the Central African Economic and Monetary Community. BCEAO, which serves the West African monetary union, is preparing another large pilot.

Those figures need care. A central bank joining does not mean every commercial bank in its jurisdiction is immediately connected, still less that businesses are using the system heavily. PAPSS remains much less forthcoming about the figure that would best establish its importance: the total value of payments actually passing across the network.

Even so, the infrastructure is real. To understand why Africans are building it, it helps to look past today’s argument about de-dollarisation and back into the continent’s economic geography.

The old map

Across much of colonial Africa, railways were not built primarily to connect one African economy with another. They ran from mines, plantations and agricultural districts towards ports. Copper, cocoa, coffee, minerals and crops moved towards ships and onward to markets thousands of miles away.

There were exceptions, but the pattern endured. Many colonies specialised in primary commodities for export while importing manufactured goods from outside. Neighbouring territories often produced similar things rather than complementary ones. Political independence arrived more quickly than a new commercial geography.

The legacy remains visible. Roughly four-fifths of African trade is still conducted with the outside world. Roads and railways remain incomplete, customs procedures can be cumbersome, trade finance is scarce and industrial supply chains between African producers, factories and consumers remain thin.

Finance inherited part of the same outward orientation. An African company could be well connected to London, Paris or New York while finding it unexpectedly expensive to pay a company in another African country.

Building the missing connections

PAPSS emerged from the broader African Continental Free Trade Area project, which aims to create a market of more than 1.4 billion people. Tariffs can be lowered and customs rules harmonised, but a continental market remains incomplete if its participants cannot easily pay one another.

Developed by Afreximbank with African Union and AfCFTA institutions, PAPSS was formally launched for commercial use in 2022. Nigerian banks have since reported processing transactions worth billions of naira, while Ghana’s GCB Bank conducted an early live commercial transaction and integrated PAPSS further into its services.

The rollout has not been frictionless. Afreximbank’s leadership has acknowledged that some African central banks initially regarded the platform with suspicion, fearing that a continental system might intrude upon their authority. Starting in West Africa also created regional mistrust elsewhere.

The African press reflects those differences. In Ghana, officials focus on the practical difficulty of building a free-trade area without an integrated payment system. In Rwanda, bankers ask why two Africans exchanging two African currencies should have to obtain a third currency first. East African coverage is more cautious, partly because the region already has sophisticated mobile-money systems and cross-border banking networks.

Africa’s problem is increasingly not the absence of financial technology. It is that successful systems often stop talking to one another at national borders. PAPSS does not need to become Africa’s only payment system. It needs to become the bridge between systems that already exist.

The harder problem is the currency

Moving the payment solves only half the problem. The harder question is what happens when the currencies themselves cannot readily be exchanged.

Consider an Ethiopian airline selling tickets in Nigeria. It accumulates naira from passengers but eventually needs to move that value elsewhere. Meanwhile, a Nigerian company may need Ethiopian birr. Historically both could find themselves searching for dollars.

The African Currency Marketplace, developed by PAPSS and Interstellar, tries to identify reciprocal demand directly. Instead of naira becoming dollars and dollars becoming birr, the marketplace attempts to match naira with birr.

More than 80 companies participated in the pilot across 12 African currency pairs. If sufficient liquidity develops, this may prove more important than the payment rail itself.

But it cannot repeal economics. If Kenyan companies want the equivalent of $500 million in Egyptian pounds while Egyptian companies want only $50 million in Kenyan shillings, the first $50 million may be matched. The remaining imbalance still exists. Someone has to hold the shillings and accept the risk of depreciation, capital controls, weak convertibility and uncertain future demand.

This is why the dollar’s role cannot be explained solely by American power. It is liquid, widely accepted and supported by deep markets. Businesses operating with unstable domestic currencies may actively prefer it.

PAPSS can help buyers and sellers find one another. It cannot manufacture demand for an unwanted currency.

The institution underneath

At the centre of this architecture sits Afreximbank. Its role extends beyond sponsoring a payments platform. The bank provides settlement guarantees and liquidity support, while PAPSS nets transactions before final settlement.

If Nigerian participants owe Kenyan participants the equivalent of $100 million while Kenyan participants owe Nigerians $92 million, the system does not need $192 million in hard currency moving in opposite directions. Most of the positions cancel each other, leaving the smaller imbalance to settle.

That is how PAPSS can reduce hard-currency requirements without pretending hard currency has disappeared.

Under its central-bank settlement model, final net positions still involve hard-currency settlement accounts at Afreximbank. A commercial-bank model provides another route. PAPSS has therefore not created a dollar-free African monetary order. It has created infrastructure that can make dollars unnecessary for many individual African transactions and reduce the amount ultimately required for settlement.

Afreximbank is also behind the Currency Marketplace, PAPSSCARD, major AfCFTA trade-finance programmes and the proposed Pan-African Gold Bank. Taken together, these begin to look less like isolated projects and more like pieces of a financial architecture.

One continent, many systems

Any continental scheme must coexist with systems already in place. South Africa has Africa’s deepest financial markets and sits at the centre of Southern Africa’s regional settlement infrastructure. East Africa has extensive mobile-money networks. The CFA-franc zones have common central banks. Ecobank and other banking groups built pan-African commercial networks long before PAPSS existed.

The task is not to sweep that landscape away but to connect it.

BEAC’s accession shows one route. Rather than integrating six CEMAC countries one by one, PAPSS can connect through their common central bank. BCEAO could eventually provide a similar gateway in West Africa.

The continental system may emerge not as one enormous machine but as a network of networks.

Then comes the dollar

PAPSS chief executive Mike Ogbalu has said that the project’s purpose is not simply to de-dollarise Africa. Nor could it. Most African trade remains external, while commodities, machinery, technology and finance continue to rely heavily on dollars.

The narrower question is more powerful: why should the dollar be indispensable to commerce between Lagos and Nairobi, Accra and Kigali, or Cairo and Abidjan?

The African argument is not necessarily that the dollar should disappear. It is that businesses should not need scarce dollars for transactions in which neither the United States nor an American company is involved.

That economic argument has geopolitical consequences. Russia’s frozen reserves and Iran’s experience of sanctions have shown how payment systems and reserve currencies can become instruments of state power. African policymakers have noticed. But PAPSS is older than the latest phase of geopolitical confrontation. Its origins lie principally in Africa’s own fragmented economic structure.

De-dollarisation may therefore be less the objective than the consequence.

China at the edge

China, meanwhile, is building alternative financial connections into Africa. Renminbi clearing is expanding. Standard Bank has connected to China’s Cross-Border Interbank Payment System, CIPS. Ecobank has explored direct African local-currency-to-renminbi settlement with Bank of China, while Angola has moved towards greater use of the renminbi.

There is no evidence that PAPSS and CIPS have been formally joined into a single alternative monetary system. The more important point is that infrastructure now exists on both sides capable of supporting substantially more direct African-Chinese settlement.

That creates an uncomfortable question for Africa. If dependence on New York and London were simply replaced by dependence on Shanghai and Hong Kong, would financial sovereignty really have increased?

Gold stays closer to home

In December 2025, Afreximbank and the Central Bank of Egypt agreed to develop a Pan-African Gold Bank. It is not yet the operational gold-settlement institution sometimes described on social media. Plans concern refining, vaulting, trading, reserves and financial services.

There is no demonstrated mechanism by which gold settles PAPSS transactions. But the project belongs to the same broad movement: keeping more of the financial activity surrounding African resources inside Africa rather than automatically exporting refining, storage, trading and intermediation elsewhere.

The test is commerce

Africa has announced ambitious integration projects before. PAPSS should therefore be judged by what businesses do rather than by declarations.

How much money actually moves through the network? How many companies choose it when alternatives exist? What do they save? Do direct African currency markets become deeper? Does hard-currency demand fall? And, ultimately, does intra-African trade increase?

The absence of a readily available continent-wide transaction-value figure matters. Network reach is not transaction volume.

Nor can financial infrastructure compensate indefinitely for weaknesses elsewhere. Africa needs factories as well as fintech, roads as well as payment rails, reliable currencies as well as clever settlement systems.

PAPSS is infrastructure, not a guarantee of integration.

A different map

Return to the trader in Lagos. His payment to Nairobi is not a monetary revolution. The dollar remains dominant. African currencies remain fragmented. Most African trade still points outward.

But something in the geography has changed.

For much of modern African economic history, infrastructure was exceptionally effective at moving African value towards an external market: mine to railway, railway to port, port to foreign buyer. Financial networks developed their own outward-facing connections.

What remained weaker were the links running across the continent. Those links are now being built in software as well as concrete and steel.

African political integration has been discussed for generations. PAPSS and the institutions gathering around it represent something quieter and more practical: an attempt to build the machinery that allows integration to function in everyday commerce.

Whether businesses use that machinery at sufficient scale remains the unanswered question.

For the Nigerian buyer paying his Kenyan supplier, however, one part of the old geography has already begun to change. The goods need not leave Africa. Increasingly, neither does the money.