A single currency for Africa: opportunities and challenges ahead

THE concept of a single currency for Africa has been a subject of discussion for many years, with advocates highlighting potential benefits such as promoting trade, investment, and economic integration on the continent. However, implementing such a currency poses significant challenges and necessitates careful planning and coordination among African nations. By adopting a single currency, the continent could eliminate exchange rate fluctuations and transaction costs, facilitating seamless cross-border trade between African countries. This could lead to increased economic integration within the continent and create new market opportunities for businesses.

Publisher

Jon Offei-Ansah

Editor Desmond Davies

Contributing Editors

Stephen Williams

Prof. Toyin Falola

Tikum Mbah Azonga

Contributors

Justice Lee Adoboe

Chief Chuks Iloegbunam

Joseph Kayira

Zachary Ochieng

Olu Ojewale

Additionally, a unified currency could create a larger and more stable market, making Africa more attractive to foreign investors. A stable monetary framework would instil confidence in investors, encouraging long-term projects and investments.

Jon Offei-Ansah Publisher

Furthermore, a single currency would enable African nations to collectively manage inflation and maintain price stability. A strong and stable currency would inspire confidence among consumers, businesses, and investors, ultimately fostering economic growth and development.

Desmond Davies Editor

Oladipo Okubanjo

Corinne Soar

Kennedy Olilo Gorata Chepete

Designer

In 2018, six of the 10 fastest-growing economies in the world were in Africa, according to the World Bank, with Ghana leading the pack. With GDP growth for the continent projected to accelerate to four per cent in 2019 and 4.1 per cent in 2020, Africa’s economic growth story continues apace. Meanwhile, the World Bank’s 2019 Doing Business Index reveals that five of the 10 most-improved countries are in Africa, and one-third of all reforms recorded globally were in sub-Saharan Africa. What makes the story more impressive and heartening is that the growth – projected to be broad-based – is being achieved in a challenging global environment, bucking the trend.

Deputy Editor

Angela Cobbinah

Contributing Editor

From a policy perspective, a single currency could facilitate better coordination of monetary policies among African countries. Central banks could work together to address economic challenges and respond effectively to regional and global financial crises.

Stephen Williams

Orji Director, Special Projects

Michael

Contributors

Simon Blemadzie

Country Representatives

South Africa

Edward Walter Byerley

Top Dog Media, 5 Ascot Knights

However, alongside these potential benefits, significant challenges must be acknowledged. The vast diversity in economic structures and levels of development across African countries is one major hurdle. Disparities in inflation rates, fiscal policies, and economic stability could make it challenging to establish a uniform monetary policy that benefits all members equally.

Justice Lee Adoboe

In the Cover Story of this edition, Dr. Hippolyte Fofack, Chief Economist at the African Export-Import Bank (Afreximbank), analyses the factors underpinning this performance. Two factors, in my opinion, stand out in Dr. Hippolyte’s analysis: trade between Africa and China and the intra-African cross-border investment and infrastructure development.

Much has been said and written about China’s ever-deepening economic foray into Africa, especially by Western analysts and commentators who have been sounding alarm bells about re-colonisation of Africa, this time by the Chinese. But empirical evidence paints a different picture.

Chuks Iloegbunam

Joseph Kayira

Zachary Ochieng

Olu Ojewale

Oladipo Okubanjo

Corinne Soar

A single currency would also require fiscal coordination and harmonisation of policies among African nations. Failure to achieve proper fiscal discipline and alignment could lead to difficulties in managing budgets and public finances, potentially causing economic imbalances.

Despite the decelerating global growth environment, trade between Africa and China increased by 14.5 per cent in the first three quarters of 2018, surpassing the growth rate of world trade (11.6 per cent), reflecting the deepening economic dependency between the two major trading partners.

Gloria

Ansah Designer

Country Representatives

South Africa

47 Grand National Boulevard Royal Ascot, Milnerton 7441, South Africa

Tel: +27 (0) 21 555 0096

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Email: ed@topdog-media.net

Ghana

Nana Asiama Bekoe Kingdom Concept Co.

Tel: +233 243 393 943 / +233 303 967 470 kingsconceptsltd@gmail.com

Moreover, member countries would relinquish some of their monetary autonomy when joining a monetary union. This would limit their control over interest rates and exchange rate adjustments, potentially affecting their ability to respond to specific economic challenges independently.

Empirical evidence shows that China’s domestic investment has become highly linked with economic expansion in Africa. A one percentage point increase in China’s domestic investment growth is associated with an average of 0.6 percentage point increase in overall African exports. And, the expected economic development and trade impact of expanding Chinese investment on resource-rich African countries, especially oil-exporting countries, is even more important.

Edward Walter Byerley

Top Dog Media, 5 Ascot Knights

47 Grand National Boulevard Royal Ascot, Milnerton 7441, South Africa

Tel: +27 (0) 21 555 0096

Nigeria

Nnenna Ogbu

The resilience of African economies can also be attributed to growing intra-African cross-border investment and infrastructure development. A combination of the two factors is accelerating the process of structural transformation in a continent where industrial output and services account for a growing share of GDP. African corporations and industrialists which are expanding their industrial footprint across Africa and globally are leading the diversification from agriculture into higher value goods in manufacturing and service sectors. These industrial champions are carrying out transcontinental operations, with investment holdings around the globe, with a strong presence in Europe and Pacific Asia, together account for more than 75 per cent of their combined activities outside Africa.

A survey of 30 leading emerging African corporations with global footprints and combined revenue of more than $118 billion shows that they are active in several industries, including manufacturing (e.g., Dangote Industries), basic materials, telecommunications (e.g., Econet, Safaricom), finance (e.g., Ecobank) and oil and gas. In addition to mitigating risks highly correlated with African economies, these emerging African global corporations are accelerating the diversification of sources of growth and reducing the exposure of countries to adverse commodity terms of trade.

This makes me very bullish about Africa!

The successful implementation of a single currency requires strong political will and decisive leadership from African governments. It demands a shared commitment to common goals, long-term planning, and the willingness to compromise on certain national policies for the greater good of the region. In conclusion, the idea of a single currency for Africa represents an ambitious vision for greater economic integration and development. While the potential benefits are compelling, it is essential to recognise the significant challenges and complexities involved. African nations need to address their economic disparities, promote fiscal coordination, and ensure political commitment and cooperation to pave the way for a successful and sustainable single currency regime. A wellthought-out plan, careful coordination, and a commitment to overcome obstacles are essential for a unified currency to become a reality on the African continent.

Cell: +27 (0) 81 331 4887 Email: ed@topdog-media.net

Ghana

Nana Asiama Bekoe

Kingdom Concept Co.

#4 Babatunde Oduse crescent Isheri Olowora - Isheri Berger, Lagos

Tel: +234 803 670 4879 getnnenna.ogbu@gmail.com

Tel: +233 243 393 943 / +233 303 967 470 kingsconceptsltd@gmail.com

Nigeria

Taiwo Adedoyin

Kenya

Patrick Mwangi

Aquarius Media Ltd, PO Box 10668-11000

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