The African Export-Import Bank (Afreximbank) is exploring ways to promote inter-African trade through one common continental currency.
Speaking at the bank’s Trade Finance Seminar 2024 in Windhoek this week, Afreximbank research economist and senior manager Anthony Coleman said the bank is currently conducting a study to understand how a single currency could streamline trade across Africa, drawing inspiration from the European model.
“We are looking at the exchange rate mechanism and exploring the potential of introducing a single currency to foster inter-African trade,” said Coleman.
“This study is already underway, and we hope its findings will provide clear recommendations for advancing the idea in a practical, effective way.”
Coleman, however, said a shared currency comes with challenges, particularly in terms of aligning the economic policies of African countries.
There is currently an ongoing challenge within West Africa, where efforts to introduce a common currency have been slowed by inconsistent economic performance.
“I remember back when I was in school, we kept talking about introducing a single currency among the five West African countries,” said Coleman.
“But every year, Nigeria meets two targets and misses others; Ghana might meet three, but still falls short on one. Nothing happens.”
Coleman said the European Union’s successful introduction of the euro is a model for African nations to consider.
If Africa is to succeed at having one currency, a firm political stance must be taken, he further said.
“The EU’s success with the euro was fundamentally a political decision,” said Coleman.
“I think that’s the key here for Africa. Without a political commitment, no technical or economic plan can succeed.
The countries must decide together that they want this, and then create the conditions to make it happen,” he added.
