VISION

Africa sets common currency goal by 2025

In 2009, African Union (AU) revived talks of a regional currency but plans were thwarted by protectionism policies and supremacy battle between regional economic power houses

In Summary
  • In June, 15 West African States adopted 'ECO' as the name for the region's common currency in Abuja, Nigeria after the idea was mooted 30 year ago
  • Mauritania's Mohamed Dhehbi said matter of currency is very important in trade, but there is a psychological factor involved
Acting Treasury CS Ukur Yatani on November 15, 2018.
Acting Treasury CS Ukur Yatani on November 15, 2018.
Image: /JACK OWUOR

Africa has revived talks of a common currency, with Finance ministers from the region optimistic the dream feasible in five to six years.

Speaking at the International Monetary Fund (IMF) head offices in Washington over the weekend, exchequer heads from Kenya, Somalia, Mauritania and Senegal said common currency will support Africa trade.

''Regarding this African union and the monetary union, we are well on course and we have many, quite a number of those initial conditions including debt's ceilings and all monetary aspects of it,'' Kenya's acting cabinet secretary Ukur Yatani said.

 
 

''The timeline is still approaching. We have no doubt, maybe the next five, six years, we'll have managed''.

His Somalia counterpart Abdirahaman Beileh said if African countries start trading with each other, local currencies will get the trust by the other regions; and, therefore, an exchange regime will be put in place.

''I don't see why we need some other currency to trade to with Kenya. We have a shilling, and we let the market decide. They have also a shilling, or Ethiopia, the Birr; as well, there will be exchanges,'' Beileh said.

Mauritania's Mohamed Dhehbi said the matter of currency is very important in trade, but there is a psychological factor involved.

''I think that if we work on the convertibility and convergence of currencies, and the psychological aspect, then we can accelerate the process for a common legal tender,'' Dhehbi said.

Senegal's Abdoulaye Diallo on other hand said it is time Africa stopped pegging its trading activities on the US dollar.

He said West Africa under the Economic Community of West African States (ECOWAS) has already made baby steps towards having a regional currency.

 
 

''We are determined to work towards achieving that common currency by the year 2020,''Diallo said.

Fifteen West African States adopted 'ECO' as the name for the region's common currency in Abuja, Nigeria on June 15. The idea was mooted 30 years ago.

Economists however warned that the idea is unrealistic and poses danger for the region's economies which are dominated by Nigeria, which accounts for two-thirds of the region's economic output.

In 2009, the African Union (AU) revived talks of a regional currency but plans were thwarted by protectionism policies and supremacy battle between regional economic power houses.

The union had projected to realise the dream by as early as last year or 2021.

An African monetary union is envisaged in the Abuja Treaty of 1991.