Africa will “one day have a common currency,” says the secretary general of the African continental free trade area – emerging economies Bitcoin News

The secretariat-general of the African Continental Free Trade Association (AFCFTA), Wamkele Mene, says that Africa “will one day have a common currency” through a proposed “Pan-African Payment and Settlement System (PAPSS)”. He added that such a currency will help “ease the restrictions on intra-African trade in foreign currencies”.

Future challenges

In comments recently released by regional news agency This Day, Mene admits that challenges will arise before the dream of a single currency is finally realized. However, to illustrate his own belief that this goal will soon be achieved, Mene refers to the situation prior to the AFCFTA, when “people never thought there would ever be a free trade area in Africa”.

AFCFTA is a free trade area that was established in 2018 and begins trading about two years later on January 1, 2021. The free trade area was created by the AFCFTA agreement between 54 of the 55 nations of the African Union. Using the founding history of AFCFTA as the basis for his enthusiasm, the Secretary General added:

But now we have it [AFCFTA]. That is why I am confident that one day the African continent will have a single currency. However, there are a number of issues to be considered in macroeconomic convergence. Fortunately, there are departments in the African Union (AU) that deal with the complexities of moving towards a single currency for the African continent. But it is certainly a positive step that will facilitate intra-African trade.

Currency conversion costs

Meanwhile, the report also cites Mene, who shares some new details about the proposed Pan-African Payment and Settlement System (PAPSS), the pilot phase of which began in June 2021. According to Mene, this test phase enables “trading within the free trade zone” to take place in the local currencies of each member state. ”The Secretary General explained why such a payment system is needed:

“We have 42 currencies in Africa. The cost of currency conversion is $ 5 billion per year. This is a very large amount of money that can be viewed as a loss of income. Therefore, we want to reduce and eliminate these costs of converting currencies in Africa for trading purposes. “

Although only six countries are in the pilot phase so far, Mene hopes that “the platform will be available to all African countries that want to switch to it by the end of this year”.

Do you think a common African currency is imminent now? Let us know what you think in the comments section below.

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