Currency Struggles and Resilience in Africa

Ghana’s cedi has faced numerous double-digit declines, while Zimbabwe remains grappling with the remnants of hyperinflation.

Nevertheless, the outlook for early 2026 appears to be more favorable. The Naira sharp drop to about 15.10% has seen some recovery, now trading around the mid-1,300 Naira range, with the spread between official and parallel markets decreasing significantly.

In 2025, the Ghanaian cedi made impressive gains, soaring over 40% against the US dollar and emerging as Africa’s top-performing currency. The cedi appreciated to roughly 10-11 cedis for a dollar, bouncing back from previous lows.

Yet, despite some data showing improvement, everyday behaviors reflect a different reality.

In cities like Lagos, Accra, Nairobi, and Harare, rents, property sales, school fees, and professional service charges are often tied to US dollars or based on exchange rates that sellers set themselves. Most salaries, however, continue to be in local currency.

Consequently, even as key economic indicators start to look better, many in Africa’s middle class are still contending with real-time currency risks.

Dollar pricing has survived its major crisis.

In Nigeria, luxury properties in major cities like Abuja and Lagos are still routinely advertised in dollars.

Landlords maintain that pricing in hard currency shields them from volatility. Even when tenants pay in naira, the amount is frequently pegged to the parallel market rate on payment day.

Take Tunde Fasakin, a marketing professional based in Abuja. He recently looked for short-term rentals in Lagos, where a two-week stay was asking for $18,000.

He works for a salary in naira. “Our income doesn’t rise with the exchange rate,” he mentions.

While property owners benefit from dollar pricing, office workers bear the direct currency risks in their household budgets. Despite a slowdown in inflation, memories of past sharp declines linger in agreements and pricing methods.

Ghana has made strides, but dollar mindset persists.

Like its peers, Nigeria and Ghana have repeatedly cautioned against pricing goods and services in foreign currencies, stressing that doing so could lead to devaluation and weaken monetary sovereignty.

As the cedi strengthens through 2025, some sectors are moving away from explicit dollar pricing. However, changing the prevailing mindset has proven challenging.

Roselena Ahiable, a researcher in Accra, observed that it wasn’t too long ago when Ghanaian companies frequently quoted prices in US dollars.

Her organization used to cover costs for services like hotel stays in dollars.

Nowadays, even if prices are mentioned in dollars, payments can be processed in cedis.

“People still quote in dollars,” she explained. “They just convert it to cedis themselves. A $300,000 property can cost either 3 million cedis or 4 million cedis depending on the seller’s rate.”

The currency on display may be local, but often the benchmarks do not follow suit.

Zimbabwe demonstrates the depth of the issue.

Zimbabwe stands as an extreme case, having endured years of hyperinflation, which has led to a loss of faith in successive local currencies. The US dollar has become integrated into day-to-day transactions, extending from groceries to rent.

Even with a new Zim dollar introduced to restore some financial credibility, the dollar continues to dominate in practice.

Zimbabwe’s situation shows that once trust in a currency erodes, it is much tougher to reverse dollarization than to prevent it from occurring in the first place.

Patterns emerge in Kenya and the region.

In Kenya, dollar pricing is most visible in the tourism sector, where safaris, park fees, and high-end hotel rates are often quoted in USD.

Although the Kenyan shilling has improved since its lows, sectors tied to external demand still rely heavily on the dollar.

Meanwhile, Tanzania has officially restricted most foreign currency transactions, and Zambia has instituted penalties for pricing in dollars.

Yet, the trend remains consistent across the region. In times of depreciating currencies or volatility, economic players tend to seek stability elsewhere.

More often than not, this search leads to the US dollar.

The primary beneficiaries of dollar pricing are exporters and companies generating foreign exchange income, while salaried workers paid in local currencies bear the brunt of the costs.

When rents or tuition link directly to dollar values, any depreciation is felt instantly.

A currency slide escalates living costs without any rise in wages. Even in seemingly stable environments, pricing strategies incorporate anticipated future risks.

Households in the middle class respond conservatively, trying to save in foreign currency accounts, cutting back spending, and delaying property buys or long-term investments.

Those without access to hard currency must face exchange rate risks head-on, creating a widening gap between households tied to foreign currencies and those reliant on local earnings.

Dollarization is not merely a monetary issue; it’s a matter of how resources are distributed.

Central banks are still fighting challenges.

Exchange rate fluctuations aren’t the only struggles central banks in Africa are managing; they are under scrutiny for their reliability.

“When citizens start to trade and price things in foreign currencies, it signals deep worries about inflation, exchange rate variations, and the future stability of local currencies,” remarks Nigerian economist Paul Alaje.

This shift is not just a surface change. It accelerates currency substitution and complicates monetary policy.

When households start to value things based on dollars, local interest rates lose much of their clout, diminishing the central bank’s capacity to regulate and manage inflation expectations.

Over time, the fallout grows. Transaction fees escalate. Inequalities between those earning in foreign currency and those who don’t become starker. Asset valuations become skewed.

Economic stability increasingly leans on inflows from foreign currencies rather than local productivity. Changing this behavior will require actions beyond mere administrative mandates.

It demands consistent macroeconomic assurance, including controlled inflation, a reliable exchange rate system, solid foreign currency reserves, and coordination with fiscal bodies to curb deficit monetization and bolster local production.

Stabilizing inflation figures is just the initial step. Regaining trust in the national currency is an even steeper hill to climb.

Dollar pricing will diminish only when households and businesses are convinced their domestic currency can function dependably as a store of value, unit of account, and medium for exchanges.

Until such confidence is restored, the dollar will remain woven into contracts, savings choices, and high-stakes transactions—even amid stable macroeconomic conditions.