SA wants single African currency to boost intra-continental trade

South Africa is in full support of establishing a single African currency backed by the continental central bank and monetary institute.

According to International Relations and Cooperation Minister Naledi Pandor, the establishment of the African Union’s (AU) African Central Bank (ACB), African Investment Bank (AIB) and the African Monetary Institute (AMI) are considered critical to facilitate a single currency and boost the intra-Africa trade.

“In every available continental platform, South Africa has consistently reaffirmed her commitment to continuing to support the continental integration in line with the provisions of the Abuja Treaty of 1991 which seeks to assist the AU member states to overcome trade barriers that impede the flow of goods, services and capital,” Pandor said

This emerged in Pandor’s response to a written parliamentary question from EFF MP Thembi Portia Msane.

Pandor said the “operationalisation” of the African Continental Free Trade Area Agreement (AfCFTA) and the start of trading on 1 January 2021 are viewed as catalysts for long-term continental “prosperity and integration”. 

“It is against this background that the establishment of the African Union Financial Institutions (AUFIs) comprising the ACB, the AIB and the AMI are considered as critical to facilitate the creation of a single currency and boost the intra-Africa trade.

“These institutions form a key component of the flagship projects of Agenda 2063,” she said.

Furthermore, Pandor said South Africa utilises its participation at AU statutory meetings to call for the establishment of the AUFIs and the subsequent realisation of a single currency. 

“It is for this reason that during the 12th Extraordinary session of the AU Assembly in July 2019 in Niamey, Niger, South Africa supported the launch of the operational instruments of the AfCFTA, which included amongst others the digital payment system. The launch of the AfCFTA instruments is a remarkable achievement following the entry into force of the AfCFTA,” she said.

Pandor also said the August 2021 Southern African Development Community (SADC) summit reaffirmed the bloc’s position to create a SADC central bank and monetary union.

According to Pandor, this is a long-term objective in creating harmonisation of SADC countries’ fiscal and monetary policies.

“In this regard, the African Monetary Institute and the African Central Bank should be long-term objectives.”

To that end, South Africa is encouraged by the AU Assembly decision from the recently concluded summit in February 2022, which directed the AfCFTA secretariat and the AU Commission to continue to work with the Association of African Central Banks (AACB) to finalise the negotiations on all the outstanding technical issues particularly the macroeconomic convergence criteria which remains a hurdle in the early operationalisation of the AUFIs.

“The negotiation process on the matter is currently underway; South Africa reaffirms its readiness to work with all stakeholders and in cooperation with other AU Member states to ensure that all outstanding technical issues are addressed expeditiously,” she said Pandor said the suggestion that South Africa is not advocating for creating a single currency on the “continent is incorrect”.