Is the end of Western financial dominance in Africa on the horizon or will the history of Libya repeat itself?

Countries across Africa recently took a major step towards economic independence from the West by launching an insurance system that will allow them to conduct inter-state trade without the involvement of the US dollar or other Western currencies. This could have major implications on the development of both African as well as Western economies. However, the Wests response to previous attempts to free Africa from the economic and political dominance of the West, then by Libya, are a source of worry.

By Jón Karl Stefánsson

In June 2023, African countries achieved a milestone in separating from Western financial institutions. The African Export-Import Bank (Afreximbank), in collaboration with the African Continental Free Trade Area (AfCFTA), launched its wholly owned subsidiary AFREXinsure, which provides specialty insurance system for trade and trade-related investments across Africa. This system aims to facilitate inter-state trade within the continent using African currencies, gradually reducing reliance on the US dollar and Euro. By the end of the year, it is estimated that up to 20 countries will have adopted this system, bolstering African economies while challenging the dominance of the American empire.

Gaddafi’s dream

The previous endeavour to establish a similar system was laid to waste in 2011. A comprehensive plan for fostering the economic independence of African countries through cooperation was formulated during a meeting of the African National Congress in 1991, held in Abuja, the official capital of Nigeria. The gathering brought together political leaders from 52 African nations, who unanimously agreed to establish an African economic zone and initiate the development of a unified African central bank. Originally scheduled for inauguration in 2028, a common African currency was anticipated to be in circulation as early as 2023. At a subsequent meeting in Sirte, Libya, there was a collective decision to expedite the establishment of common financial institutions for African nations, with the aim of opening the pan-African central bank by 2020, a significant advancement from the original target of 2028 (ECA, 2009). It was widely recognized that Libya, then Africa’s most prosperous country, played a pivotal leadership role in driving this process forward.

On December 13, 2010, the finance ministers of African countries met in Yaounde, Cameroon. The main topic of discussion was the report of a working group on the establishment of an African Monetary Fund, which would take over the role of the International Monetary Fund in the continent. The organizations that had demanded that African countries sell their assets and made African countries dependent on former colonial powers for economic aid would thereby lose their grip on the continent. The original narrators of the report were optimistic: everything looked like the African currency fund would be operational by the end of 2011. At the meeting, the African countries simultaneously rejected the European countries’ offer to participate in the fund in exchange for providing initial capital, as this would go against the fundamental idea of the fund.

The purpose of the African currency fund was to ensure the macroeconomic growth of African countries, to encourage increased trade between African countries and to create a common African market. The fund would also lead the continent’s joint vision of the future in economic matters, protect economic stability and assist states that had economic problems on their own terms (Mimboe, 16.10.2010).

Western Supremacy Under Threat:

The establishment of the African Monetary Fund marked the first step in Africa’s pursuit of economic independence, accompanied by two other proposed institutions: the African Central Bank in Abuja, Nigeria, and the African Investment Bank (AIB) in Tripoli, Libya. The envisioned common African currency, backed by substantial gold reserves held by African nations, aimed to partially replace the multitude of currencies in circulation across the continent. Many of these currencies are currently tied to the French CFA Franc, the British pound, or the US dollar, making it evident that their value would experience a significant decline upon the introduction of the African dollar.

Simultaneously, Africa also aimed to challenge Western military superiority on the continent. At the 2009 African Union Congress, member states decided to form a separate African Defense Council, signalling a direct challenge to Western military activities dominated by AFRICOM, a division of the US military.

But the African currency fund did not open on time for a simple reason. Three months after the meeting, his biggest investor by far was taken out. But on February 17, 2011, extremist opposition groups gathered in Libya’s cities for a “day of rage,” with the loyal support of Western intelligence services, and launched a revolution. The Libyan Investment Fund had decided to use at least 30 billion US dollars in the initial capital of the fund. This was by far the largest part of the bank’s 42 billion capital. These 30 billion were mostly obtained by transferring money from investments in Europe and the United States, but the first thing NATO did after it was decided to attack the then government in Libya, the Jamahiriya regime, was to “freeze” these assets (Kamboon, 22.09.2011). In short, the revolution that erupted in Libya in 2011, supported by Western intelligence services and NATO allies, led to the demise of the African Defense Council and undermined Libya’s aspiration for economic and political independence.

Potential for Pan-African Independence

The successful implementation of the Pan-African Payments and Settlement System (PAPSS) by the African Export-Import Bank presents a renewed opportunity for the dream of Pan-African independence to become a reality. As African countries increasingly assert their autonomy and reduce reliance on Western currencies, it remains to be seen how the United States and Europe will respond this time. The outcome will be crucial in shaping the future dynamics of Africa’s economic landscape.

Africa’s recent strides towards economic independence through initiatives like the Pan-African Payments and Settlement System (PAPSS) demonstrate the continent’s determination to reduce reliance on Western financial dominance. While previous attempts, notably Libya’s endeavour, were thwarted, the current momentum and increasing participation of African countries indicate a potential shift in the balance of power. The unfolding events will undoubtedly have significant implications for Africa’s economic future and the relationship between the continent and the West.

References

Jean-Paul Pougala, “Why the West wants the fall of Gaddafi? An analysis in defense of the Libyan Rais” Rights Monitoring, 16.04.2011.

Kamboon, K. 22.09.2011. The Libyan Tragedy. Trinidad Express Newspapers.

Mimboe, P.R. 16.10.2010. Cameroon: African Monetary Fund operational in 2011. Ai Yaoundé: Africa Info.

Steigan, J. 2023. Kenya revives the African plan to drop the dollar.

United Nations Economic Commission for Africa [ECA]. 09.09.2009. Sirte Declaration. Sirte, Great Socialist People’s Libyan Arab Jamahiriya: ECA. Retrieved on 13.10.2011 from uneca.org.

Jón Karl Stefánsson is from Reykjavík, Iceland. He studied computer science and psychology in the University of Iceland and received his MA in psychology in the University of Tromso, Norway with focus on biased language in news discourse. He is currently working on a PhD in Sociology, with focus on mental health and power dynamics. Since 2003 he has written several articles independently in mostly Icelandic newspapers and independent news outlets and has focused his writing on biased language, propaganda, and its effects on society.