Push for single Africa currency begins

African economists and top academicians are meeting in Nairobi at a congress whose theme is towards the creation of a single African currency.

The push for a single currency to facilitate trade and help in fast tracking the integration of African countries has began.

African economists and top academicians are meeting in Nairobi at a congress whose theme is towards the creation of a single African currency. The congress is to deliberate on the possibilities of adoption of the currency for the next three days.

The African Union, through its economic affairs department has organised the workshop whose recommendations will be presented to a heads of states and governments summit later in July.

According to Maxwell Mkwezalamba, AU commissioner for economic affairs, the process of establishing a common currency was part of the Abuja Treaty aimed at uniting the continent both economically and politically.

“For the integration to yield benefits, greater volumes of trade among members must take place and one of the key elements of this is to eliminate multiple currencies and move towards adoption of a single currency,” said Mr Mkwezalamba.

Signed in 1991, the Abuja Treaty consented to establishing the African Economic Community under the larger umbrella of the AU. Among the other areas that the treaty sought to create included the African Central Bank, African Investment Bank and an African Monetary Fund.

At inception, the treaty had proposed the name Afro for the single currency. The treaty had also proposed the enactment of the Afro by 2028 with the African Central Bank being the sole issuer of the currency.

Already the AU commission is working on the steps to establish the bank in Abuja Nigeria. The discussions are being held with the Nigerian authorities to sign a memorandum of understanding for hosting a technical steering committee to undertake implementation of the bank.

Other mandates of the bank would be to be the banker of the African Government, Africa’s private and public banking institutions, to regulate and supervise the African banking industry. It would also set the official interest and exchange rates in conjunction with the African Government’s administration

Addressing delegates at the congress, Planning and National Development minister Wycliffe Oparanya said adopting of a single currency was a fundamental political issue.

“Currency unions are formed as a larger strategy push to integrate the countries entering the union often in combination of among other things political and civic commitments and mutual trust among countries. The forum is useful in pointing out what measures and benchmarks are ideal if we aspire to have one currency,” said the minister.

The search for a single currency for the continent also comes at a time when most economic blocks are pursuing the same front at different levels. This has been underscored by the level of ease in trading when countries subscribe to a single currency. This has also been attributed to taming issues of price distortions where multiple currencies are involved.

“It is envisaged that the single currency will promote cross border trade and investments as well as reduce the cost of doing business in the region,” said Mr Oparanya.

In as much as the continent may be eager to adopt the single currency, the modalities of doing so may provide real challenges to AU. However, they can choose to borrow from other models already in operation like the Euro for the European Union.