A single currency for all of Africa can be the springboard that launches Africa as an economic power block globally.
This ideal is what South African President Cyril Ramaphosa firmly believes in, and he strongly backed the proposal of creating a homogeneous currency for African countries in a bid to attract infrastructure investment and ease intra-African trade.
Speaking to journalists on March 21st at the African Union Summit in Kigali, Rwanda, where 44 countries signed a deal to establish the African Continental Free Trade Area (AfCFTA), Ramaphosa said a single African currency was the natural next step. He added that a digital currency would be ideal for the continent.
“We will begin to interface with the idea and notion of a single currency, possibly even a digital currency, and it’s possible that a digital currency will precede a real single currency,” said Ramaphosa.
South Africa did not sign on the AfCFTA deal on Wednesday, as Ramaphosa still needs to get approval from domestic stakeholders.
The proposal of a single African currency is not a novelty as it was first suggested in the 1991 Abuja Treaty, which laid out the establishment of the African Economic Community.
The treaty outlines six stages for achieving a single monetary zone for Africa that were to be completed by approximately 2028. In the early stages, regional cooperation and integration within Africa would be strengthened, and this could involve regional monetary unions. The final stage involves the establishment of the African Central Bank (ACB) and creation of a single African currency and an African Economic and Monetary Union.
Resistance to the single currency had been previously felt from a majority of the African leaders who were concerned about maintaining economic sovereignty. However, headway has been made in the past decade where East and South African Countries forming the common market of East and Southern Africa (COMESA) are developing a monetary project.
The main challenge will be the war-torn and hunger- stricken countries. With major disasters as a distraction it will be difficult to reach a consensus.
Time will tell if the harmonized currency will be a success in Africa.