Business has vanished at Kingsley Odafe’s clothing shop in Nigeria’s capital, forcing him to lay off three employees.
One culprit for his troubles stands out: The US dollar’s strength against the Nigerian currency, the naira, has pushed the price of garments and other foreign goods beyond the reach of local consumers.
A bag of imported clothes costs three times what it did two years ago. The price these days is running around 350,000 naira or $450.
“There are no sales anymore because people have to eat first before thinking of buying clothes," Odafe said.
Across the developing world, many countries are fed up with America’s dominance of the global financial system — especially the power of the dollar.
They will air their grievances next week as the BRICS bloc of Brazil, Russia, India, China and South Africa meet with other emerging market countries in Johannesburg, South Africa.
But griping about King Dollar is easier than actually deposing the de facto world currency.
The dollar is by far the most-used currency in global business and has shrugged off past challenges to its preeminence.
Despite repeated talk of the BRICS countries rolling out their own currency, no concrete proposals have emerged in the run-up to the summit starting Tuesday. Emerging economies have, however, discussed expanding trade in their own currencies to reduce their reliance on the buck.
At a meeting of BRICS foreign ministers in June, South Africa's Naledi Pandor said the bloc’s New Development Bank will seek alternatives “to the current internationally traded currencies" — a euphemism for the dollar. Pandor was sitting alongside Russia's Sergey Lavrov and China's Ma Zhaoxu — representatives of two countries that are especially eager to weaken America's international financial clout.
The BRICS grouping dates to 2009. Originally, it was just BRIC, a term coined by Goldman Sachs economist Jim O’Neill to refer to the rising economies of Brazil, Russia, India and China. South Africa joined in 2010, adding the “S” to the name. More than 20 countries — including Saudi Arabia, Iran and Venezuela — have expressed interest in joining BRICS.
In 2015, the BRICS countries launched the New Development Bank — an alternative to the U.S. and European-dominated International Monetary Fund and World Bank.
“Developing nations are itching to loosen the grip of Western dominance and open the door to a new world order where the East commands equal, if not greater, influence,” said Martin Ssempa, a Ugandan political activist who has defended a law Uganda passed this year prescribing the death penalty for some homosexual acts.
The legislation prompted the World Bank to announce this month that it was halting new lending to the East African country.
Critics in the developing world are especially uneasy about America’s willingness to use the dollar’s global influence to impose financial sanctions against adversaries — as it did to Russia after the invasion of Ukraine last year.
They also complain that fluctuations in the dollar can destabilize their economies. A rising dollar, for instance, can cause chaos abroad by drawing investment out of other countries.
It also increases the cost of repaying loans denominated in dollars and buying imported products, which are often priced in dollars.
