Experts at the ongoing 2021 African Economic Conference (AEC) say that a common crypto currency and an integrated capital market can boost trade in Africa and sustain growth after the COVID-19 crisis.
They said this during a panel discussion on reforming Africa’s financial system at the AEC holding in a hybrid format with physical and online participants in Cabo Verde.
Anouar Hassoune, Professor of Finance and CEO of the West Africa Rating Agency, believes that a common crypto currency would ease the cost of doing business and give the continent an identity.
“We need to come up with a crypto currency that is acceptable to each member state.
‘’It is better to do it at the continental level, and we have the expertise to do it, because it is a matter of governance, not an issue of technology.’’
According to him, the proposed crypto currency can serve as an alternative to monetise some of the continent’s endowments, such as gold and other commodities.
Mr Augustine Ujunwa, an economist at the West African Monetary Institute (WAMI), said a well-functioning integrated capital market is very crucial in raising debt to finance Africa’s developmental needs.
“Currently our markets are small, our countries are small, we need to adopt a regional approach towards integrating markets.
“However, 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 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.”
Ms Emmanuelle 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 added that while central banks have a crucial role, it is essential for economies to diversify funding sources to lessen dependence on them.
Other panelists said that the existence of various regional groupings and their different protocols, including cross-border payments, needed to be addressed to facilitate the implementation of an integrated capital market.
According to them, the continent first needs to harmonise national rules and protocols governing the financial systems of individual countries to make the reforms workable.
They said that experience had shown that some countries were reluctant to allow other protocols to interface with their systems.
The 16th AEC 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.
Organised by the African Development Bank (AfDB), the United Nations Development Programme (UNDP) and the Economic Commission for Africa (ECA), the conference which began on Thursday will end on Saturday.