Africa must protect its wealth and stop shipment of raw materials especially minerals, the Afreximbank now says.
Instead, the continent should invest on industrial zones that will add value with a focus on increasing intra-Africa trade, as the African Continental Free Trade Area (AfCFTA) gains momentum.
This comes amid calls for dedollarisation across the continent, which means a reduction on reliance on the US dollar as a reserve currency, medium of exchange or as a unit of account.
Afreximbank has developed the Pan-African Payment and Settlement System (PAPSS), a cross-border, financial market infrastructure enabling payment transactions across Africa, which allows countries to use their respective currencies.
Kenya, which is among countries piloting the AfCFTA, has agreed to support the roll-out of PAPSS in the region.
President William Ruto is also leading calls for dedollarisation in the wake of weakening African currencies, among them the Kenyan shilling.
A weak currency means Kenya and other African states are spending more to secure dollars and other foreign currencies to meet their import needs, pushing up import bills and cost of living.
African countries have in recent times struggled to build up enough forex reserves to pay for imports.
In Kenya for instance, foreign exchange reserves fell to 10-year low of to $6.56 billion in March, exposing the country to increased dollar scarcity and resultant effects on the cost of living and economic growth.
The usable reserves fell to $6.56 billion (Sh845.8 billion at the then exchange rate), with an import cover of below the preferred four-month cover,which was at 3.67 months.
The reserves have however improved to Sh1.04 trillion, thanks to loan disbursements by the IMF, World Bank and diaspora remittances.
“If you trade using your own currencies, you reduce the import bills and it makes it easier not only for large cooperates but also small businesses to trade,” SAID Denys Denya, AfreximBank executive vice president-finance, administration and banking services.
He spoke in Nairobi yesterday, during an Intra-African Trade Fair (IATF) forum, ahead of the main summit in Cairo, Egypt in November.
Multinationals have over years build camps in Africa where the exportation of oil and gas, raw gold, lithium, cobalt, diamond, copper, and also food products in raw status, among others, remains high.
There is currently a huge focus on cobalt, manganese and lithium, as the world moves towards EVs (electric vehicle).
“We are sick and tired of our natural resources being produced and exported to other markets,”said Gainmore Zanamwe, director-trade facilitation and IATF, African Export–Import Bank (Afreximbank).
According to the lender, infrastructure that Africa has was designed by the “colonial masters to extract raw materials from the continent to their capitals”, hence most of the roads and rails are towards the ports, as opposed to connecting the hinterlands.
To turn this around, the lender has committed to finance rail, roads, ports and other infrastructure, including those willing to invest in shipping lines and vessels that will focus on intra-Africa trade.
