Africa will one day have a single currency to boost efficiency of trade. This is according to the secretary General of the African Continental Free Trade Area (AfCFTA), Wamkele Mene.
The secretary general was speaking during a virtual call that addressed the organization’s achievements so far and its plans for the future.
AfCFTA is a free trade area that was agreed upon in 2018 by 54 / 55 countries across the continent, and took effect in January 2021. The role of the organization is to enhance trade on the continent by progressively eliminating barriers.
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One barrier is the multiple currency regimes across the continent. This has made people resort to foreign currencies such as the US dollar for cross-border trade.
Today, many African traders are utilizing cryptocurrencies such as bitcoin to facilitate cross-border and global trade. Cryptocurrencies are used to make payments to international suppliers, while also accepting them for exports within the region.
As part of its efforts to boost trade, AfCFTA is piloting a program called Pan-African Payment and Settlement System (PAPSS) which intends to make it possible for trading on the continent to be done using any of the currencies. The African Export-Import Bank (AFREXIMBANK) is providing the liquidity to facilitate on-boarding to this program when the pilot ends in 2 months.
But beyond that, the Secretary General believes that one day, Africa will have a single currency. He added that there were challenges including macro-economic issues to face – the same way that people doubted if AfCFTA was possible is the same way they are doubting a single currency.
Addressing this concern, Mene said:
“We have 42 currencies in Africa. The cost of converting currencies amounts to $5 billion a year.
I am confident that one day the African Continent will have a single currency.”
– Secretary General, AfCFTA
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RECOMMENDED READING: The East African Community States to Explore the Potential for a CBDC in a Move to Upgrade the Shared East African Payment System
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