Africa’s dollar drought pushes more continent’s countries to economic crises

Africa is in the grip of a dollar drought and the current continent-wide scarcity of the US dollar is further pushing many already beleaguered African countries into deeper economic crises, according to a new Bloomberg report.
Several Sub-Saharan African (SSA) countries, including Kenya, Nigeria, Ghana and Tanzania, have for several months experienced shortages of the greenback, which is a huge challenge for businesses on the continent, as the US dollar is the dominant currency in international transactions. The Bloomberg report also states that governments are now turning to bartering, currency devaluations, central bank exchange controls, and help from the International Monetary Fund (IMF) and the Middle East to shore up their balance sheets. The dollar shortage is also hurting consumers and local businesses as import costs soar, fueling inflation, the report noted.
In the same vein, it noted that investors are rewarding nations whose efforts to boost dollar liquidity are paying off, but are punishing those that can’t guarantee access to the currency they need to invest and repatriate returns, and are steering clear of countries without adequate reserves to cover import costs or debt repayments. They are also steering clear of countries without adequate reserves to cover import costs or debt repayments. “African currencies are the worst performers in the world this year, with about a dozen sliding at least 15% against the dollar,” the report added. However, in some cases, the IMF is coming to the rescue, such as when it said last week it would expand financing to Kenya to bolster the East African country’s reserves.