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Africa Eyes Monetary Union in a Bid to Boost AfCFTA Implementation

23 août, 2021
Africa Eyes Monetary Union in a Bid to Boost AfCFTA Implementation

Dakar, 23 August 2021 (ECA) – Adoption of a single currency within the framework of the African Continental Free Trade Area (AfCFTA) dominated presentations as the Economic Commission for Africa (ECA), the African Association for Public Administration and Management (AAPAM), the Pan-African Strategic and Policy Research Group (PANAFSTRAG) jointly kick-started a two-day roundtable to deliberate on the Single Currency and build awareness of the potential role of FinTech in boosting intra-African trade.

The two-day roundtable, which opened today in Dakar, Senegal aims to consider the ongoing efforts of a gradual build-up of a Continental Payments System within the emerging framework of digital trade finance tools such as FINTECH, which will continue to enhance financial inclusivity and accessibility for traders and consumers for a smooth implementation of AfCFTA.

Noting the roundtable’s theme, Mr. David Luke, Professor in Practice and Strategic Director of Firoz Lalji Institute for Africa at the London School of Economics and former Coordinator of the African Trade Policy Centre of ECA said Africa gave an analysis of the single currency which concluded that we need to be sceptical about the benefits and alert to the risks involved. He opined that the AfreximBank initiative, which is known as the Pan-African Payment and Settlement System (or PAPSS) is an optimal policy response.

“The PAPSS aims to establish a clearinghouse payment platform that utilizes national currencies. In view of the systemic risks of a single currency, an effective clearinghouse system with room for innovation by utilizing FinTech solutions is a viable alternative,” Mr. Luke underlined.

In her welcoming remarks, Ms. Karima Bounemra Ben Soltane, Director of the African Institute for Economic Development and Planning (IDEP) referred to the digital platforms that could contribute to more efficient trade on the African continent and for overcoming the challenge of a multiplicity of currencies on the African continent.

Mr. Jean-Denis Gabikini, Acting Director of Economic Affairs of the African Union Commission spoke about the AU’s major initiatives of strengthening African financial institutions, as it steps towards its financial independence, which is gaining momentum in recent years amid the African continent's aspirations towards financial autonomy from reliance on outside sources.

“The AU is developing a payment and settlement platform to facilitate payments between African countries without having to recourse to a third currency, such as the euro or the dollar”, Mr. Gabikini noted.

The opening ceremony of the meeting also included a statement by Ms. Ladi Bala-Keffi, Deputy Director of the Central Bank of Nigeria, who spoke on the role of the Central Bank of Nigeria, as a vital stakeholder in the AfCFTA Agreement. She highlighted that Nigeria was selected to become the hub for payment in Africa, for which a resilient payment infrastructure is required and the country also has.

“The African Continental Free Trade Area is a mechanism that should promote movement of goods and services while integrating Africa,” said Mr. Adeyinka Adeyemi, Senior Advisor at the ECA. “We need to understand and engage the private sector going forward as the single African currency has many promises in terms of boosting trade across the continent.”

He underlined the need to deliberate with all key stakeholders on the complexities about how we can get to a single currency for the African continent, as a positive step that will facilitate intra-African trade.

The two-day meeting, financed by the European Union, comprised of key stakeholders including Regional Economic Communities, and experts from the Africa Trade Insurance Agency, representatives of the African Chambers of Commerce, the private sector and stakeholders involved in the implementation of the African Continental Free Trade Area (AfCFTA).

This meeting is part of a more extensive project aimed at deepening Africa's trade integration through the effective implementation of the AfCFTA. Financially supported by the European Union, ECA has been working with its partners including the African Union Commission (AUC), International Trade Centre (ITC), United Nations Conference on Trade and Development (UNCTAD) and a selection of independent trade experts to ensure effective AfCFTA implementation strategies.

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