Accelerating De-dollarization! Congo to Ban US Dollar Cash Transactions Starting Next April

The Democratic Republic of Congo has announced it will restrict US dollar cash transactions starting next April, marking a critical step for this highly dollarized African economy in its de-dollarization journey. Central Bank Governor Andre Wameso announced the plan during the International Monetary Fund and World Bank Spring Meetings in Washington, stating the measure aims to combat money laundering activities and boost confidence in the domestic currency. US dollar bank accounts will be retained, but related payments will shift to electronic channels. A one-year transition period and potential amnesty arrangements will be implemented to encourage citizens to deposit cash dollars into the banking system. The policy rollout comes against the backdrop of the strong performance of the Congolese franc in recent years, which appreciated nearly 30% against the US dollar throughout 2025. However, Alexander Venter, an economist at Oxford Economics, noted that given the nature of Congo's cash-based informal economy and the weak public confidence in the local currency, "implementation risks are high." Policy Framework: Electronic Alternatives to Cash Congo's degree of dollarization ranks among the highest globally. According to IMF data, approximately 90% of bank deposits and over 97% of loans in the country are denominated in US dollars, rooted in historical trauma from hyperinflation in the 1990s. Wameso stated that commercial banks receive billions of dollars in cash annually, yet only a small fraction remains on their balance sheets. "This means the imported dollars do not stay within the formal economic system," he said. "Much of these funds may flow to neighboring countries facing dollar scarcity, creating serious issues regarding fund traceability." Under the plan, cash dollar transactions will be restricted, but US dollar bank accounts themselves remain unaffected. Payment channels will be mandated to go electronic. Authorities have designed a one-year transition period and may introduce an amnesty mechanism to encourage the public to deposit held dollar cash into banks. To support this transition, the Central Bank of Congo has approved a batch of fintech companies to enter the market and established partnerships with Visa Inc. and Mastercard Inc. to expand payment options coverage. Last week, the central bank also issued six-month treasury bills, with the first auction selling 100 billion Congolese francs worth of bonds, three-quarters of which were successfully sold, to support the local currency exchange rate. "This tells us that economic agents expect stability to continue," Wameso said. Anti-Money Laundering Pressures and Regional De-dollarization Trends This policy adjustment is also driven by pressure from international regulators. Congo currently remains on the Financial Action Task Force (FATF) "gray list"—a list covering over 20 countries currently, where inclusion can damage sovereign credit ratings and jeopardize the ability to integrate into the global banking network. Wameso stated that the measures aim to strengthen regulation, expand coverage of the banking system, and bring Congo up to international anti-money laundering standards, thereby removing its "gray list" status. From a regional perspective, Congo's move is not isolated. Countries like Tanzania and Zambia have recently strengthened controls on US dollar usage, requiring domestic transactions to be settled in local currencies. Congo's entry into this trend reflects a broader continental movement regarding monetary sovereignty. The continued strengthening of the Congolese franc provides important support for these reforms. Earlier this month, the Congolese government successfully completed its first euro bond issuance, raising $1.25 billion—with coupon rates of 8.75% for five-year bonds and 9.5% for ten-year bonds. This success occurred despite dual challenges: rising oil prices driven by Middle East conflicts and ongoing rebellion in eastern provinces. "If the market is willing to purchase Congo's ten-year bonds, it means the market is betting on peace," Wameso said. Over the weekend, the Congolese government reached an agreement with the M23 armed group, backed by Rwanda, to advance the peace process, including prisoner exchanges. Congo's economy relies heavily on mining, particularly copper. Gold Reserve Plan Moves to Agenda Wameso also revealed that the central bank is actively advancing a plan to bolster gold reserves using domestic output to enhance foreign exchange buffer capacity. The central bank is collaborating with the state-owned enterprise DRC Gold Trading SA to identify ethically sourced artisanal gold and is evaluating certified refiners in Switzerland, the UAE, and Singapore. Furthermore, he stated that the central bank revised bank equity structure requirements last year. Previously, banks were required to have four shareholders each holding at least 15% of shares; now, shareholder numbers, shareholding ratios, and exemption arrangements are determined through case-by-case negotiations. Risk Disclosure and Disclaimer Markets involve risk; investment requires caution. This article does not constitute personalized investment advice and does not account for individual investors' specific investment objectives, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions herein align with their particular circumstances. Investments made based on this content are at the user's own risk.