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    Pan-African crypto currency ‘can ease business costs’

    A common cryptocurrency and an integrated market for capital could increase trade in Africa and sustain economic growth following the Covid-19 crises. To digitalize delivery and payment channels, financial institutions must work in concert.

    Experts at the African Economic Conference in Cape Verde agreed with this view. But, they stressed that for reforms to be effective, the continent must first harmonize national rules and protocols that govern the financial systems of individual nations.

    Anouar Hassoune, professor of finance and chief executive of the West Africa Rating Agency, participated in a discussion on reforming Africa’s financial system. He stated that a common cryptocurrency would reduce the cost of doing business, and give Africa an identity.

    “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 proposed crypto currency could serve as an alternative to monetise some of the continent’s endowments, such as gold and other commodities.

    Augustine Ujunwa, an economist at the West African Monetary Institute, said a well-functioning integrated capital market is crucial in 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 stated that central bank financing was becoming critical in the wake 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.”

    Prerequisites for pan African crypto currency

    The panel, moderated by Marie-Laure Akin-Olugbade, African Development Bank director-general for West Africa, also explored 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, supported the idea of a pan-African crypto currency, but said there were 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.

    She said that central banks play a vital role but it was important for economies to diversify their funding sources to reduce dependence.

    Panellists pointed out that there are many regional groups and different protocols. This includes cross-border payments. It is important to address these issues to make it easier to implement an integrated capital market. They said that experience has shown that certain countries are hesitant to allow other protocols interface with their systems.

    The African Economic Conference took place in a hybrid format. It saw key delegates gather on the Cape Verde island, Sal, and virtually. It brought 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 was organized by African Development Bank, the United Nations Development Programme (UNDP) and the Economic Commission for Africa (ECA).

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