Analysts at the 2021 African Economic Conference on Friday opine that boosting trade in Africa and sustaining growth after the Covid-19 crisis can be achieved through a common cryptocurrency and an integrated capital market.
However, to make the reforms workable, the continent needs to harmonise national rules and protocols governing the financial systems of individual countries, panellists said during a discussion on reforming Africa’s financial system.
Anouar Hassoune, a professor of finance and the CEO of West Africa Rating Agency, believes that a cryptocurrency will give the continent a sense of identity and ease the cost of doing business.
“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 stressed.
He added that the cryptocurrency could serve as a means to monetise some of the continent’s resources, such as gold and other commodities.
According to Augustine Ujunwa, an economist at the West African Monetary Institute, an integrated capital market is crucial to raising debt to finance Africa’s development needs.
“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,” he said.
Ujunwa said central bank financing had become critical, especially in the wake of the Covid-19 crisis. “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.”
Marie-Laure Akin-Olugbade, Director General for West Africa at the African Development Bank, moderated the panel discussion on the role of central banks in financing African development, as well as Islamic financing.
Emmanuelle Riedel Drouin, director of the Economic and Financial Transition Department at Agence Française de Développement, supports the idea of a pan-African cryptocurrency, but notes there are some 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.
According to her, while Central Banks play a crucial role, economies need to diversify their funding sources so they are less dependent on them.
Several panellists noted that the existence of various regional groups and their different protocols, including cross-border payments, need to be addressed so that an integrated capital market can be implemented.
They said some countries do not want to let other protocols integrate with their systems because of their past experience.
The 2021 African Economic Conference is being held in a hybrid format, with key delegates gathering on the Cabo Verde island of Sal, as well as virtually. It brings together a wide range of stakeholders, including policymakers, development institutions, the private sector, and researchers, to discuss ways to sustainably grow the continent’s development funding sources. The conference is organised by the African Development Bank, the United Nations Development Programme, and the Economic Commission for Africa.