Experts have called for a common cryptocurrency and an integrated capital market, saying it could boost trade in Africa and sustain growth after the COVID-19 crisis.
They made the call at the 2021 African Economic Conference, held in a hybrid format in Cabo Verde island, Sal, on Friday.
Discussing Africa’s financial structures, panelists said the continent would first have to synchronise national rules and protocols governing the financial systems of respective countries to make the reforms achievable.
Anouar Hassoune, professor of finance and CEO of the West Africa rating agency, said that a common cryptocurrency would ease the cost of doing business and give the continent an identity.
Hassoune also said that Africa possessed the technical ability to own a cryptocurrency.
“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,” Hassoune said.
“It’s a matter of governance, not an issue of technology.”
He added that the proposed cryptocurrency could serve as another means of monetising some of the continent’s natural resources, such as gold and other commodities.
Augustine Ujunwa, an economist at the West African Monetary Institute, said that an efficient integrated capital market would play a critical in financing Africa’s development needs.
“Currently, our markets are small, our countries are small, and we need to adopt a regional approach towards integrating markets,” he said.
“‘But, before we get there, we must harmonise our laws, regulations and protocols governing our fintech and digital systems.”
Ujunwa said central bank financing had become critical, especially considering the Covid-19 crisis.
“Central banks should go beyond their price stability role and pursue a growth-focused monetary policy,” Ujunwa said.
“‘They should begin to think of innovative ways of providing finance for the critical sectors of the economy.”
The panel, moderated by Marie-Laure Akin-Olugbade, African Development Bank (AfDB) director-general for West Africa, also examined the role of central banks in financing Africa’s development and Islamic financing.
Emmanuelle Riedel Drouin, head of the economic and financial transition department at Agence Française de Développement, also championed the idea of a pan-African crypto currency.
However, Drouin said that the continent had to optimise its digital channels, together with financial institutions.
“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.
She added that while central banks played a crucial role, it was important for countries to diversify economic funding sources to lessen dependence on them.
Panelists noted that the existence of various regional groupings and their different protocols, including cross-border payments, should be addressed to facilitate the implementation of an integrated capital market.
According to the panelists, experience had shown that some countries were hesitant to allow other protocols to interface with their systems.