According to some African economic experts, the continent needs an integrated capital market and a single cryptocurrency in order to increase trade and support growth.
Common Cryptocurrencies: Their Importance
Experts in the African economy argue that both a single cryptocurrency and an integrated capital market are needed for trade to increase growth.
According to a press statement released by the African Development Bank Group (ADBG), these experts had made their arguments during a discussion on reforming Africa’s financial system.
Anouar Hashoune, Professor of Finance and CEO at the West Africa Rating Agency, was quoted as one of the expert in the statement. He argued that common cryptocurrency can reduce business costs. He explained:
Each member country must accept a crypto currency. 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 also suggested that such a cryptocurrency could serve as an alternative to monetize some of the continent’s endowments, such as gold and other commodities.
The statement also quotes Emmanuelle Riedel Drouin, head of the Economic and Financial Transition Department at Agence Française de Développement. The expert was supportive but cautioned there were conditions to ensure that common crypto could be launched. She elaborated:
“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.”
Africa requires a functional integrated capital market
Drouin stated that, while central bank’s are crucial to economies’ success, diversifying funding sources is essential to decrease their dependence.
While many African countries are opposed to privately issued cryptocurrency, there have been some that have expressed an interest in creating their own digital currency. One of these countries is Nigeria. Ghana, however, will likely launch its own digital currency. Experts fear that the existence of multiple digital currencies will reduce the chance of Africa becoming a single cryptocurrency country.
The statement includes Augustine Ujunwa (an economist with the West African Monetary Institute) who supports a functioning integrated capital market. He explained:
Our markets and countries are both small at the moment. We need to take a regional approach in order to integrate markets. However, it is necessary to harmonize our regulations, laws and protocols that govern our digital and fintech systems before we can get there.
In terms of the central bank’s role, the economist said that they need to be innovative in providing financing for key sectors of the economy.
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