African exporters of agricultural and agrifood products often purchase raw materials locally in their domestic currencies (such as CFA franc, Naira, Cedi, Shilling, etc.) and sell internationally in US dollars. But when the US dollar weakens against African currencies, it has major consequences on profitability and competitiveness.
Understanding this dynamic — and adjusting strategy — is critical to staying resilient and profitable.
When the value of the US dollar falls against African currencies:
Exporters earn fewer units of local currency for every dollar of export revenue.
Meanwhile, local costs remain the same in domestic currency.
As a result, profit margins are squeezed unless prices are adjusted or efficiencies are improved.
Example:
If 1 USD falls from 600 CFA francs to 500 CFA francs, exporters receive 17% less in local currency for the same shipment — even if the international sale price (in dollars) stays the same.
Key Point:
A weaker dollar is generally bad for African exporters who buy in local currency and sell in USD.
Given the volatility of the US dollar, many African exporters are exploring invoicing in euros.
However, switching to euros is not a simple fix — it requires strategic evaluation.
Pros of invoicing in euros:
Reduced volatility if the euro is more stable against the local currency.
Natural fit for European buyers who prefer dealing in euros.
More stability for exporters in countries whose currencies are pegged to the euro (e.g., WAEMU countries using the CFA franc).
Cons and risks:
Currency risk still exists, just shifted to the EUR/local currency relationship.
Not all global markets accept euro-based pricing, especially in Asia and the Americas where USD is dominant.
Additional administrative complexity (contracts, payments, hedging).
Strategic Guideline:
Exporting in euros can be a smart move if your major buyers are in Europe and your local currency is more stable against the euro than the dollar.
Based on the above, here’s a clear roadmap for African agrifood exporters:
a) Monitor Exchange Rates Actively
Set up alerts or dashboards to track USD/local currency and EUR/local currency movements.
Anticipate risks instead of reacting when exchange rates shift suddenly.
b) Diversify Currency Exposure
Negotiate export contracts both in USD and EUR where possible.
Offer flexible payment options depending on the buyer’s location and currency strength.
c) Explore Financial Hedging
Use simple financial instruments like forward contracts to lock in favorable exchange rates.
Work with banks or trade finance institutions that specialize in supporting exporters.
d) Align Market Focus with Currency Strategy
Prioritize European markets if exporting in euros makes financial sense.
For USD markets (Asia, Middle East, Americas), plan for possible dollar volatility.
e) Adjust Pricing and Cost Structures
Build flexible pricing models that account for currency movements.
Continuously seek ways to lower local operational costs to protect margins.
Currency fluctuations are a reality that African agricultural exporters must navigate carefully.
While switching from US dollars to euros can mitigate some risks, the best strategy is dynamic management — monitoring, diversifying, and adjusting quickly based on market realities.
Resilient exporters treat currency management as a core part of their international business strategy — not just an afterthought.
I hope you enjoyed reading this post and learned something new and useful from it. If you did, please share it with your friends and colleagues who might be interested in Agriculture and Agribusiness.
Mr. Kosona Chriv
Founder of LinkedIn Group « Agriculture, Livestock, Aquaculture, Agrifood, AgriTech and FoodTech » https://www.linkedin.com/groups/6789045/
Group Chief Sales and Marketing Officer
Solina / Sahel Agri-Sol Group (Ivory Coast, Senegal, Mali, Nigeria, Tanzania)
https://sahelagrisol.com
Chief Operating Officer (COO)
Deko Group (Nigeria, Cambodia)
https://dekoholding.com
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Adalidda (India, Cambodia)
https://adalidda.com
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Deko Group
Producer and exporter of agricultural commodities.
Learn more at https://dekoholding.com
Solina Sahel Agri-Sol Group
Exporter of agricultural commodities and agrifood products.
Learn more at https://sahelagrisol.com
Adalidda Ltd.
Adalidda is specialized in empowering agribusiness firms and cooperatives across Asia and Africa. Our innovative branding, marketing, and sales strategies are tailored to open new markets, enhance revenue streams, and ensure your agricultural products shine on the global stage.
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