BRICS has motivated various developing countries in Africa to abandon dependence on the US dollar and opt for transactions in their respective local currencies.
Earlier this year, Kenyan President William Ruto se intercede for African countries to stop using the US dollar for cross-border trade, stressing that it should only be used in dealings with the US itself and not with other countries. He suggested that transactions with other countries should be done in their local currencies rather than the US dollar.
Ruto’s address earned him a standing ovation in Parliament and his fellow leaders praised his point of view. This development suggests that African countries may decide to distance themselves from the US dollar once the new BRICS currency gains traction in the global market.
The President asked himself:
Why is it imperative to transact with Djibouti in dollars? There’s no reason for that. If we are exporting from Kenya to Djibouti, why do we have to transact in USD? How is the dollar involved in trade between Djibouti and Kenya?
BRICS intends to introduce a new currency in the near future to challenge the US dollar’s dominant role as the world’s reserve currency. While South Africa is the only African representative in BRICS, Kenya may consider joining this initiative after the introduction of the new currency.
If Kenya joins the de-dollarization effort, it could inspire many other African countries to do the same. Also, if more countries come together to reduce their dependence on the US dollar, this could lead to a devaluation of the greenback, which will put significant pressure on the US economy.