Business downturn has led to lay-offs at Kingsley Odafe’s clothing store in Nigeria’s capital city. The driving force behind this slump is the pronounced strength of the U.S. dollar against the local currency, the naira.
This currency disparity has resulted in imported goods, including garments, becoming prohibitively expensive for local consumers.
BRICS nations will address frustration in upcoming Johannesburg summit
The cost of a bag of imported clothes has tripled over the past two years, now priced at approximately 350,000 naira, equivalent to $450.
Odafe revealed, “There are no sales anymore because people have to eat first before thinking of buying clothes.”
This frustration with the dollar’s dominance in the global financial system will be aired by a group of countries including Brazil, Russia, India, China, and South Africa (BRICS) in a meeting next week in Johannesburg.
However, actually challenging the dollar’s status is a complex endeavor.
Although there has been talk among BRICS nations of introducing their own currency, there have been no definitive proposals leading up to the summit.
Nevertheless, there have been discussions about expanding the use of their own currencies in trade to decrease reliance on the dollar.
At a recent BRICS foreign ministers’ meeting, South Africa’s Naledi Pandor, alongside representatives from Russia and China, expressed the intention of the bloc’s New Development Bank to explore alternatives to current internationally traded currencies, meaning the dollar.
Despite this sentiment, the dollar continues to dominate global trade and finance. Emerging economies are concerned about the U.S.’s capacity to enforce financial sanctions and the destabilizing effects of dollar fluctuations.
While many are keen to lessen Western dominance, there’s no easy replacement for the dollar.
Approximately 96% of trade in America and significant percentages in other regions from 1999 to 2019 were invoiced in dollars. The euro and China’s yuan have gained some traction in recent years, but the dollar’s primacy remains unchallenged.
Though the idea of alternative currencies is attractive, the practical implementation is far from straightforward. Argentina and Zimbabwe exemplify contrasting viewpoints: in Argentina, there are calls for the dollar to replace the unstable peso, while in Zimbabwe, the dollar is credited with stabilizing the economy after hyperinflation.
