Benedict Oramah Says Africa should keep reserves on the continent

What was billed as a routine anniversary lecture turned into a direct challenge to the global financial order. Professor Benedict Oramah, former president of the African Export-Import Bank (Afreximbank), took the stage at the Aelex 20 Annual Lecture in Lagos expecting to talk about African trade. Instead, he delivered an argument that the continent is trapping itself: roughly $350 billion to $500 billion of Africa’s foreign exchange reserves sit in non-African banks, earning safety ratings for foreign institutions while African governments borrow back their own money at punitive rates — or turn to the IMF, Head Topics reported.

The core claim is simple and stark. African economies remain hostage to commodity cycles and third-currency settlements because their payment obligations routinely exceed their receipts. Oramah’s prescription: keep the reserves on the continent, borrow in local currencies, and settle intra-African trade through regional payment rails rather than routing everything through dollars and euros.

The $500 Billion Leak Nobody Talks About

Oramah put a number on a practice most finance ministries treat as untouchable. “International best practice,” he said, is to deposit foreign exchange reserves in foreign banks “for safety.” The result: most of Africa’s $350 billion to $500 billion in reserves ends up outside the continent. Yet when the owners of those funds approach the same depository banks for credit facilities, they are turned down — lectured about compliance, country risk, and “other imaginary problems that were non-issues when the money travelled there,” according to Punch Newspapers.

That asymmetry — African money welcome abroad, African borrowers suspect at home — is what Oramah wants dismantled. He pointed to his own record at Afreximbank as proof the model works: during his tenure, the institution mobilized more than $40 billion in deposits from African countries, and not a dollar of it was lost, while the deposits lowered the bank’s own financing costs, Leadership Newspapers reported.

“I do not see European banks putting their reserves in African banks. If our institutions are weak, we should fix them. And if we lose the money in our institutions, let’s learn from them.” — Professor Benedict Oramah

PAPSS: The $5 Billion-a-Year Settlement Engine

The mechanical heart of Oramah’s plan is the Pan-African Payment and Settlement System (PAPSS). The platform links nearly three dozen central banks across more than 40 countries, alongside over 200 banks and payment service providers, and could save the continent about $5 billion annually in payment costs, Head Topics reported.

But Oramah sees PAPSS as more than a cost saver. He described a scenario in which Nigeria borrows in naira to pay contractors from Egypt or South Africa for roads, railways, and ports, and PAPSS settles the transaction in the contractor’s own national currency. “Our national debt will go down,” he said. That single mechanism — borrowing locally to build locally — is how he argues Africa can shrink its sovereign debt burden instead of compounding it.

He extended the same logic to capital markets: cross-border bond transactions that let investors in one African country buy securities issued in another using their respective currencies would deepen liquidity and push monetary policies toward convergence.

The “Original Sin” Trap

Oramah’s diagnosis of Africa’s vulnerability is blunt. The inherited inability to issue long-term debt in a national currency on international markets — economists call it the “original sin” — exposes African economies to sovereign debt crises. “So everywhere we turn, we are trapped,” he said.

His counterpunch is cultural as much as financial. “Best practice is always somebody’s practice, designed for somebody’s attention,” he told the Lagos audience. African leaders, he argued, must have the conviction to design policies around their own realities rather than importing templates built for other economies. Punch Newspapers noted his sharper framing: solutions must reflect Africa’s own ambitions, capabilities, and realities, not blind adoption of universal prescriptions — including an over-reliance on IMF bailouts.

Oramah’s Model Identifies Clear Gains and Risks

The winners in Oramah’s model are clear: indigenous financial institutions gain deposits and lending capacity, governments cut foreign-currency borrowing costs, and contractors get paid faster in stable local currencies. The losers are the offshore banks collecting fees on African reserves and the conditionality regimes attached to external financing.

The skeptic has a case too, and Oramah half-concedes it. Parking reserves in African institutions means accepting real risk: weaker regulatory firewalls, currency volatility, and governance failures that have sunk banks before. His answer is not denial but exposure — take calculated risks, fix weak institutions, and learn from losses rather than outsourcing safety at a premium. What remains unproven is whether PAPSS and cross-border bond markets can scale fast enough to absorb half a trillion dollars in repatriated reserves without triggering the very instability critics fear.

Why This Matters Beyond Lagos

Oramah closed by urging African nations to stop exporting raw materials without building industries around them, treating mineral wealth as capital for transformation. The reserves, the payment rails, and the conviction to use both — that is the full argument. Whether Lagos, Abuja, and the other 40-plus countries on PAPSS act on it is the open question the lecture leaves behind.

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