The common currency in Africa might be while, but there is a workable solution for AfCFTA.
The African Continental Free Trade Area and the African Export-Import Bank, Afreximbank are currently working on a flexible payment option for trade under AfCFTA.
While waiting for its planned common currency, there is a need for a sustainable and workable means of payment under AfCFTA on the continent now.
In order to ease the burden of doing business especially under the AfCFTA, it is building a digital platform for payment and settlement.
This will help eliminate the challenges of exchange in trade transactions associated with the 42 currencies on the continent.
At this time, trading on the continent still involves currency conversion which is inefficient and costly. More so, it is a difficult arrangement for traders to maintain and is simply not sustainable.
Digital platforms do the opposite – make trade more efficient and less costly.
However, according to Mene during an ANC Progressive Business Forum webinar, “I don’t know how long it will take Africa to have a common currency”. This suggests that the common currency which already goes by the name “Eco” might be a while.
The secretary-general of the African Continental Free Trade Area (AfCFTA) Wamkele Mene has also said that the continent is not ruling out the idea of a common currency.
- Nigeria is a low ranking country in the overall regional integration of Africa
- CBN, Afrexim Bank to utilise PAPSS to improve trade and payment
The challenges of a common currency in Africa
The AfCFTA presents an opportunity for impactful economic regional value chains. A common currency in Africa will be a huge turn for the continent as well as a benefit for the AfCTA but it is also challenging now.
Currency valuation, international policies, oil prices are factors that reflect in the discussion of a common currency for Africa as is the confluence of many small economies.
The International Monetary Fund (IMF) welcomes the idea of the common currency for Africa.