As maintained by some African economic experts, the Africa continent requires an integrated capital market and a common African Cryptocurrency to boost trade and give support to economic growth after Covid-19.
Importance of a common African Cryptocurrency
From the argument of experts of the African economy, about a single Cryptocurrency and integrated market capital required for trade in other to growth, the African Development Bank Group(ADBG) released a press statement that these arguments ensued during a discussion on how to reform Africa’s financial system.
Professor of Finance and CEO at the West Africa Rating Agency, Anouar Hashoune being one of the experts was quoted to have argued that a single Cryptocurrency can help in reducing business costs. He elaborated that “each Africa member country must accept a common cryptocurrency as this is better to do at the continental level, and seeing that we have the expertise to do it, it is a matter of governance, not an issue of technology”
The professor also opined that such Cryptocurrency can serve as an alternative to monetizing some of the endowments of the continent like gold and other commodities.
The statement also quoted the head of the Economic and Financial Transition Department at Agence Française de Développement, Emmanuelle Riedel Drouin elaborating that although she is in support of the stance but cautioned that some conditions need to be met to ensure the launch of a single Cryptocurrency.
“We all shouldn’t forget that a lot of work has to be done on digital infrastructure, the development of payment systems, the payment system’s interoperability really needs to be worked on, so, a lot of work needs to be done in collaboration with financial institutions on digitalization of delivery and payment channels,” she stated.
Africa needs a functionally integrated capital market
Emmanuelle Riedel Drouin mentioned that, while the Central Banks are important to economic success, fund sources diversification is necessary to decrease their dependency.
Although lots of African countries are not in support of privately issued cryptocurrencies, there are some who have shown interest in launching their own digital currency and Nigeria is one of such.
Ghana most likely will launch its own digital currency as well and experts fear that the emergence of multiple digital currencies will decrease the chance of Africa becoming a single Cryptocurrency continent.
Augustine Ujunwa (an economist with the West African Monetary Institute) who also shows supports for a functioning integrated capital market in the statement also mentioned that
“African markets and countries are both small at the moment and it is required of us to take a regional approach in order to integrate these markets. However, harmonizing our laws, regulations, and protocols governing our digital and fintech systems is necessary before we can get there”.
In terms of the central bank’s role, the economist stated that there is a need for them to be innovative in providing financing for key sectors of the economy.