Toward single african currency:A Necessity of Prior Convergence of African Regional Economies

Vers la Création d’une Monnaie Unique Africaine: une priorité pour la convergence des économies régionales africaines

About half a century ago, African leaders established the Organization of African Unity (OAU) to promote socio-economic structures aimed at improving the welfare of the citizens of member states and general integration of the continent. Many institutions were established on this vision, but owing to ideological differences and convoluted financial infrastructures, the goals have not materialized.

The success of the single European currency, Euro, which has become very central to many recent economic progress

in Europe by offering more efficient means of transacting businesses and using the human and institutional capabilities of the continent to foster more prosperity has shown the power of integrated monetary structure in a globalize world (Ekekwe, 2008). As the world moves towards knowledge-based economic structures and information

societies, which comprise networks of individuals, firms and nations that are linked electronically and in interdependent global relationships, the power of a single African currency has become very important. A single African currency, if realized, would radically redefine Africa’s social, political and economic landscape and position the continent on a solid footing to tackle the enormous challenges of the 21st century (Ekekwe, 2002).

Since the inception of OAU, the founding fathers of many African nations have believed on a more united African

continent. The idea of a single African currency became clearer when OAU member states in 2001 agreed to transform the intergovernmental organization into the African Union (AU) towards positioning the continent for the challenges of globalization (Masson, 2004) through better economic policies, growth and good governance.

AU, which has become the successor of the OAU, has retained the original vision of the founders of OAU- a greater regional integration in both political and economic affairs (Siddiqi, 2006). Shortly afterwards, in August 2003, the Association of African Central Bank Governors agreed to develop plans to establish a common central bank that would manage a single continental currency by 2021 (Masson, 2004). This plan is poised to offer an African market with no internal frontiers in which the free movement of goods, persons, services and capital is ensured. This push for a single currency stands for an Africa of unity, integration and strength. However, there is a huge possibility of potential failure of a single currency if implemented haphazardly with enormous consequences to not only frica’s global image but also for individual countries’ economies and, ultimately, the people.A single African currency has many promises in terms of boosting trade across the continent and benefits for all member states through synergy and symbiosis. It has the capacity to increase economic cooperation among member AU nations and stimulate faster development efforts across the continent (Debrun, 2002). Many African nations are still oriented in trade toward former colonizers in Europe than immediate neighbors and across African capitals; there is an understanding that currency unification could be a key catalyst to transforming the continent. The major challenge is how the continent could develop the plan to have this unified monetary union considering the opsided economic structures among the nations, which can affect response strategy during economic crises. This is fundamental as if major regional economic powers stay out of this unification for fear of being net losers, it could have adverse effects to realizing the continental goal.

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