De-dollarisation in Africa: Zimbabwe’s move away from the greenback

For more than 75 years, the US dollar has dominated as the world's reserve currency. Of late, however, many countries have been turning to local currencies for trade, seeking to reduce costs and sidestep sanctions.

Zimbabwe is one of them.

In April, the country's central bank introduced ZiG, or Zimbabwe Gold, a new gold-backed currency, to tackle its hyperinflation –its sixth attempt at a new currency since 2008.

Currently, The ZiG is used in about 20 percent of local transactions, compared with nearly 80 percent for dollars.

Zimbabwean officials have recently set early 2026 as the new deadline for adopting the ZiG as the country’s sole currency, replacing the previous target of 2030, according to a Bloomberg report.

Until then, the inflation-hit Southern African country aims to increase the use of the local currency and build up gold and foreign exchange reserves, which stood at $285 million when the currency was launched and now exceed $380 million.

Zimbabwe is not the only country that has explored alternative currencies in response to economic challenges.

On February 11, the head of Niger's junta hinted at the possible creation of a common currency with Burkina Faso and Mali, stating that “the currency is a first step toward breaking free from the legacy of colonisation”.

Nigeria, the Republic of the Congo, and Sudan are also investing in increasing the use of local currencies for trade.

The collective move to loosen the dollar's stranglehold on global commerce has been ramped up by the efforts of BRICS countries (Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates) and other major commodity exporters since the start of the war in Ukraine in 2022, which saw the US and its western allies freeze a large chunk of Russia's foreign reserves.

In June, BRICS News reported that a 1974 agreement between the US and Saudi Arabia had expired, with Saudi Arabia now poised to conduct oil sales in different currencies.

"Saudi Arabia's 50-year-old petrodollar agreement with the United States has expired, with no new agreement in place," BRICS News announced on X in a post dated June 13, 2024.

"Saudi Arabia will now sell oil in multiple currencies, including the Chinese RMB, Euros, Yen, and Yuan, instead of exclusively in US dollars,” the post continued.

India has also paid for Russian crude in rupees, dirhams and Chinese yuan. Transactions conducted in Chinese yuan accounted for approximately 10 percent of these transactions in 2023, with the remainder made in Indian rupees and UAE dirhams, according to the Indian news portal The Print.

Brazil is another country that has been moving away from reliance on the US dollar for international trade. President Luiz Inacio Lula Da Silva signalled his intent to do so last year.

In April 2023, Lula Da Silva lashed out at the International Monetary Fund (IMF) during a visit to China, questioning in an impassioned speech:

“Who was it that decided that the dollar was the currency after the disappearance of the gold standard.”

“Today, countries have to chase after dollars to export when they could be exporting in their own currencies."

Although many countries, including those in Africa, are moving towards de-dollarisation, new currencies still face the challenge of achieving the widespread acceptance and trust that the US dollar commands.

For now, the greenback still plays a major role in world trade, maintaining its status as the top reserve currency, with 58.85 percent of global reserves held in it –though this is down from 63.04 percent a decade ago.