Mr Wamkele Mene, the Secretary-General of the African Continental Free Trade Area (AfCFTA), has revealed that the cost involved in converting African currencies into the dollar stands at 5billion dollars annually.
The Secretary-General of the African Continental Free Trade Area made this known at an AfCFTA media briefing for the 8th Meeting of the Council of Ministers in Accra.
To address this issues, and as part of efforts to make the AfCFTA work, the Secretary-General noted that a new payment system, Pan African Payments and Settlements has been launched to assist member states to trade using a single currency. This, he stated, will resolve the challenges of using third currency to trade.
“You will know that on the 13th of January, here in Accra, we launched the Pan African Payments and Settlements System which will enable us to now start trading among ourselves as African countries using a local currency rather than a third currency.
“We have 42 currencies in Africa. The cost of currency convertibility according to our studies, is in excess of 5billion dollars a year, and this is not only monetary cost but also it is a cost of lack of competitiveness constrains in terms of being competitive, access to affordable currency exchange facilities, lack of affordability of small medium enterprises who want to trade across borders, across regions.”
Mr Wamkele Mene
Mr Wamkele Mene disclosed that the Payment and Settlement System which was launched, was given approval by the ministers.
“So, now with the Pan African Payment system which was recognised by the Ministers yesterday, [January 30], as a tool of implementation, we now will be able to, as Africans, trade using local currency. When you switch onto the platform, you will be able to trade with somebody in Kenya, you will trade using Ghanaian cedi, they will trade using Kenyan shilling.”
Mr Wamkele Mene
AfCFTA and Its Objective
The African Continental Free Trade Area (AfCFTA) is a free trade area founded in 2018, with trade commencing as of 1 January 2021. It was created by the African Continental Free Trade Agreement among 54 of the 55 African Union nations.
The free-trade area is the largest in the world in terms of the number of participating countries since the formation of the World Trade Organization.
Accra, Ghana serves as the Secretariat of AfCFTA. It was commissioned and handed over to the African Union (AU) by the President of Ghana, Nana Addo Dankwa Akufo-Addo on August 17, 2020 in Accra.
The United Nations Economic Commission for Africa estimates that the agreement will boost intra-African trade by 52 percent by this year 2022.
Some of the general objectives of the agreement are to: create a single market while deepening the economic integration of the continent. To establish a liberalised market through multiple rounds of negotiations, aid the movement of capital and people, facilitating investment, move towards the establishment of a future continental customs union.
AfCFTA also seeks to achieve sustainable and inclusive socioeconomic development and gender equality and structural transformations within member states to enhance competitiveness of member states within Africa and in the global market.
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