Single Currency Would Enable African Countries to Boost Trade, Economist Assures

The creation of a single currency would enable greater economic integration in Africa, boost trade between the continent's countries, Malian economist Modibo Mao Makalou told Sputnik.

The specialist points out that the currency issue remains one of the main barriers to trade, particularly between members of COMESA, a market representing over 580 million citizens and a combined gross domestic product of more than $720 billion.

"Regional integration can only be fully achieved if citizens no longer have to worry about the currency used when trading. A single currency would promote trade and integration between African countries, so that they can trade more with each other," explains Modibo Mao Makalou.

AfCFTA and the dollar barrier

Prior to the introduction of a common currency, African countries will be able to rely on the African Continental Free Trade Area (AfCFTA) to stimulate intercontinental trade. Coming into force in 2021, the zone encompasses 54 of the 55 African countries.

Modibo Mao Makalou points out that the project aims to create a truly single continental market.

"The AfCFTA aims to stimulate intra-African trade in goods through the gradual elimination of tariffs, non-tariff barriers and the development of value chains at regional and continental level. Within five years of its implementation, it should eliminate over 90% of customs duties on goods traded between member states," the economist noted.

GITEX AFRICA 2023 Technology Fair: Interest Shown for Both Russia & Africa

4 June 2023, 10:59

AfCFTA's contribution could lift 30 million people out of extreme poverty by 2035, he adds.

Greater economic integration in Africa is viewed as all the more important as some of the continent's countries are currently struggling with the limits of the dollar.

Recently, Kenyan President William Ruto stated that his country is finding it increasingly difficult to import and export, due to the greenback's monopoly.

"The rise in interest rates in the United States to combat inflation is making international transactions difficult for central banks, especially for African countries which are net importers", Modibo Mao Makalou explained.

To break away from this dependence on the dollar, the Kenyan leader has been pushing for an increase in trade in national currencies, a logic already implemented by other countries such as India, China and Russia.