Single currency dream dismissed
Experts have poured cold water on the South African president's suggestion that a 'single, digital' currency for the African continent is the logical next step.
South African president Cyril Ramaphosa's idea of a single currency for all 54 African countries has been met with cynicism by experts who believe that the suggestion was not well thought through.
This past weekend, speaking to journalists on the sidelines of the African Union extraordinary summit in Kigali, where 44 countries signed a deal to establish the African Continental Free Trade Area (AfCFTA), Ramaphosa said a single African currency was the natural next step.
“We will begin to interface with the idea and notion of a single currency, possibly even a digital currency, and it's possible that a digital currency will precede a real single currency because it is easier than having a proper full currency,” Ramaphosa told the Mail and Guardian.
Ramaphosa agreed that it might take many years before his idea could become reality.
“It may take time, it may take years, but it's interesting that something that we never spoke about in the past, we are now talking about. Because people always had a sense of sovereignty around their own currency, feeling that their currency is about their sovereignty, their nationhood, but people are now thinking beyond the borders of their own nation.”
Commentators say Ramaphosa's suggestion would not be easy to implement and cited the difficulty around a single monetary area like the Eurozone. “The only reasonable response is, 'Cyril, are you sure you are well?' Yesterday [last week Sunday] Nigeria would not even sign a continental African free trade area agreement and you want to talk about a single currency?,” asked University of Namibia professor Roman Grynberg. According to Grynberg, there were lessons to be drawn from Botswana's reluctance to belong to the Common Monetary Area which includes South Africa, Namibia, Lesotho and Swaziland. “Ask the British and Norwegians what they think of the euro. And if that seems too far to go to get a lesson on why monetary union is so difficult, then just ask Botswana why they left the Rand Monetary Area and created the pula,” said Grynberg.
He urged patience and said economic integration would not be easy to achieve right away.
“Please be patient and leave some African integration work for your grandchildren,” said Grynberg.
IJG head of research Eric van Zyl said vast economic differences and the political instability experienced in some African countries would prove to be a notable challenge for policymakers. “It would pose significant challenges to implement. The differences in economic and political stability between countries, not to mention creditworthiness, would likely make implementation more challenging than setting up the euro was,” said Van Zyl.
The African Union first mooted the idea of a single currency for Africa as far back as 2009.
Economic affairs commissioner at the African Union (AU) Maxwell Mkwezalamba previously told Reuters that the African currency would be implemented no later than 2021.
“The date is not yet established but it will not be later than 2021... we may bring it down to 2018,” Mkwezalamba said. He said free movement of goods and services and the creation of an African Central Bank to be based in Abuja, Nigeria, all needed to be in place first.
“We need to harmonise our fiscal and monetary policies and then have an intermediate step towards having an African central bank which is going to issue the common currency,” he said.
OGONE TLHAGE
This past weekend, speaking to journalists on the sidelines of the African Union extraordinary summit in Kigali, where 44 countries signed a deal to establish the African Continental Free Trade Area (AfCFTA), Ramaphosa said a single African currency was the natural next step.
“We will begin to interface with the idea and notion of a single currency, possibly even a digital currency, and it's possible that a digital currency will precede a real single currency because it is easier than having a proper full currency,” Ramaphosa told the Mail and Guardian.
Ramaphosa agreed that it might take many years before his idea could become reality.
“It may take time, it may take years, but it's interesting that something that we never spoke about in the past, we are now talking about. Because people always had a sense of sovereignty around their own currency, feeling that their currency is about their sovereignty, their nationhood, but people are now thinking beyond the borders of their own nation.”
Commentators say Ramaphosa's suggestion would not be easy to implement and cited the difficulty around a single monetary area like the Eurozone. “The only reasonable response is, 'Cyril, are you sure you are well?' Yesterday [last week Sunday] Nigeria would not even sign a continental African free trade area agreement and you want to talk about a single currency?,” asked University of Namibia professor Roman Grynberg. According to Grynberg, there were lessons to be drawn from Botswana's reluctance to belong to the Common Monetary Area which includes South Africa, Namibia, Lesotho and Swaziland. “Ask the British and Norwegians what they think of the euro. And if that seems too far to go to get a lesson on why monetary union is so difficult, then just ask Botswana why they left the Rand Monetary Area and created the pula,” said Grynberg.
He urged patience and said economic integration would not be easy to achieve right away.
“Please be patient and leave some African integration work for your grandchildren,” said Grynberg.
IJG head of research Eric van Zyl said vast economic differences and the political instability experienced in some African countries would prove to be a notable challenge for policymakers. “It would pose significant challenges to implement. The differences in economic and political stability between countries, not to mention creditworthiness, would likely make implementation more challenging than setting up the euro was,” said Van Zyl.
The African Union first mooted the idea of a single currency for Africa as far back as 2009.
Economic affairs commissioner at the African Union (AU) Maxwell Mkwezalamba previously told Reuters that the African currency would be implemented no later than 2021.
“The date is not yet established but it will not be later than 2021... we may bring it down to 2018,” Mkwezalamba said. He said free movement of goods and services and the creation of an African Central Bank to be based in Abuja, Nigeria, all needed to be in place first.
“We need to harmonise our fiscal and monetary policies and then have an intermediate step towards having an African central bank which is going to issue the common currency,” he said.
OGONE TLHAGE
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