- While it is still a long way off, the development of a common African currency is still an objective, says an official.
- Secretary General of the African Continental Free Trade Area Wamkele Mene says the multiplicity of currencies in trade can be addressed with technology.
- Digital platforms could potentially make trade less costly and more efficient.
Africa is unlikely to have a common currency soon, but technology could help overcome the difficulties posed by the multiplicity of currencies when trading, a top official has said.
Secretary General of the African Continental Free Trade Area (AfCFTA) agreement, Wamkele Mene, said, "moving towards a common currency in the African continent is the objective", outlined in the Abuja Treaty Establishing the African Economic Community of 1991.
"We know there are a number of challenges that are related to that," he told a webinar hosted by the ANC's Progressive Business Forum on Thursday. "You have to deal with macro-economic convergence and so on, but in the interim what do we do to overcome the fact that there are 42 currencies on the continent?"
He said the pan-African payments and settlements platform that was being developed in partnership with Afreximbank would go a long way toward addressing this issue and towards making trade on the African continent less costly and more efficient.
He said: "I don't know how long it will take for Africa to have a common currency. It may not happen in our lifetime, but we have got to start somewhere to address the multiplicity of currencies as a constraint for intra-Africa trade."
Mene said the AfCTA was one of the "first steps" towards a common currency, as initially, all 55 African Union member states would apply the same rules for the ease of doing business.
"We are also considering how digital platforms can contribute to more efficient trade on the African continent," he said.
Currently, the absence of a common currency was making trade complicated and costly.
"If you are in Ghana and you want to trade with somebody in South Africa, first you have to convert the Ghanaian cedi into the dollar. The recipient will then have to convert the dollar into the rand. That is costly. It actually contributes also to inefficient trade patterns on the African continent."
He said it would take time, "but in the absence of that, this [technology] is the best tool that we have that we can offer businesses, [and] that we can offer investors. This is the best tool that we have for facilitating ease of doing biz and for overcoming this challenge of a multiplicity of currencies on the African continent."