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Mineral-Backed Currency is Smart Way to Empower Africa to Use Its Wealth, Algerian Economist Says

15:05, 28 February 2025

Elizaveta Roschina

Writer/Editor

In late January, the African Development Bank presented a plan to create a currency backed by minerals rather than gold. The mechanism is inspired by the gold standard but backed by essential minerals such as cobalt, copper, lithium and some rare earth elements.

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The African Development Bank's initiative to create a currency backed by minerals rather than gold is a smart solution to involve Africa in a new dynamic of using its wealth, PhD in economics, lecturer at the University of Algiers Abdelkader Mechdal told Sputnik Africa.

"It's a well-thought-out solution, an intelligent solution that will involve Africans in a new dynamic of using African wealth," the speaker pointed out.

Moreover, the mineral-backed currency initiative is designed to protect the interests of the continent's countries, the economist noted.

"[African nations] are fortunate enough to hold some 30% of the world's rare earth and mineral reserves, which therefore gives Africa the opportunity to step up to new levels of realization of certain very important strategic projects, such as in the field of energy, thus moving on to intelligent solutions, solutions that will involve international investors," the expert said.

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Africa needs "to move to another reality," using its wealth of natural resources that will strengthen the value of the local currencies, Mechdal added.

"We need to move to another reality, which is to use existing means in Africa to strengthen the value of African currencies. [...] 30% of the world's reserves are African reserves. They are held by Africans. So this situation will strengthen the currency that will be created," he explained.

However, the economist urged the continent to "stay ahead of the curve" and invest in industrial transformation.

"The value chain can be created here in Africa. Instead of using minerals in their raw form, we can make them more profitable by setting up industrial projects on the continent. This will allow better processing of these minerals, which will create more value in Africa," he emphasized.