Experts Believe a Common African Cryptocurrency Can Boost Trade -

Experts Believe a Common African Cryptocurrency Can Boost Trade

According to some African economic experts, the continent needs an integrated capital market and a common cryptocurrency in order to increase trade and sustain growth.

Common Cryptocurrencies: Their Importance

Experts in the African economy argue that a common cryptocurrency and an integrated capital market are needed to increase trade and sustain African growth after the Covid-19 crisis.

According to an African Development Bank Group press release (ADBG), the experts made their points during a discussion about reforming Africa’s financial sector.

Anouar Hassoune (Professor of Finance, CEO of West Africa Rating Agency) was one of the experts who were quoted in the statement. He argued that a common cryptocurrency could reduce costs of doing business. He explained:

We need to come up with a cryptocurrency that is acceptable to each member state. It’s better to do it at the continental level, and we have the expertise to do it. It’s a matter of governance, not an issue of technology.

Hassoune suggested that such a cryptocurrency could be used to monetize some continent’s endowments such as gold or other commodities.

Emmanuelle Riedel Drouin is also quoted in the statement. She is head of the Economic and Financial Transition Department of Agence Francaise de Developpement. While the expert supports the idea, she warned that there are certain conditions that must be met before common crypto can be launched. She elaborated:

We should not forget that there are a lot more work to do on the digital infrastructure and the development of payment systems. Payment system interoperability is really needed so there is lots of work to done in collaboration with financial institutions on digitalization of delivery and payment channels.

Africa needs a functioning integrated capital market

Drouin said that central banks have a vital role but it was still important for economies to diversify their funding sources to reduce dependence.

While many African countries are opposed to privately issued cryptocurrency, some of them have expressed an interest in creating their own digital currencies. One of these countries is Nigeria, which has launched its digital currency. Ghana is expected to follow suit. Experts fear that the creation of so many digital currencies will reduce the chance of Africa having its own cryptocurrency goal.

The statement also includes Augustine Ujunwa from the West African Monetary Institute who supports a functioning integrated capital market. He explained:

Currently, our markets are small, our countries are small and we need to adopt a regional approach towards integrating markets. But, before we get there, we must harmonise our laws, regulations and protocols governing our fintech and digital systems.

The economist suggested that central banks should be able to find innovative ways to finance the most critical areas of the economy.