Financial experts attending the ongoing 2021 African Economic Conference have suggested that it’s time to create an African cryptocurrency and an integrated capital market. Doing this would help boost trade on the continent, ease business costs and sustain growth post COVID-19.
But in order to accomplish that, there is need to harmonise the rules and protocols governing every African country’s financial systems. This is the only way to make the necessary reforms feasible, the experts said.
“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,” stressed Anouar Hassoune, Professor of Finance and CEO of the West Africa Rating Agency.
He added that doing this would help give the continent an identity. According to him, the proposed cryptocurrency (which is yet to be named) could help with monetising some of the continent’s endowments such as gold and other commodities.
Also pushing the same agenda was Augustine Ujunwa, an economist with the West African Monetary Institute. He said:
“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.
“Central banks should go beyond their price stability role and pursue a growth-focused monetary policy. They should begin to think of innovative ways of providing finance for the critical sectors of the economy.”
Meanwhile, the head of the Economic and Financial Transition Department at Agence Française de Développement, Emmanuelle Riedel Drouin, supported the idea of a pan-African crypto currency. She however pointed out some of the prerequisites.
“We should not forget that there is a lot of work to be done on the digital infrastructure, the development of payment systems, payment system interoperability really needs to be worked on, so there is a lot of work to be done in collaboration with the financial institutions on digitalisation of delivery and payment channels,” she said.
Speaking further, she noted that African central banks are going to have a crucial role to play, especially with regards to financing the project. However, in order to lessen dependence on the apex banks, she advised that it was also important for African economies to diversify their funding sources.
In conclusion, the panelists pointed out that it was important to address the issue of the existence of various regional groupings and their different protocols, including cross-border payments. They said this will facilitate the implementation of an integrated capital market. According to them, experience has shown that some countries are reluctant to allow other protocols to interface with their systems.
