The President, Nana Addo Dankwa Akufo-Addo, has said African countries need to urgently set up a single payment system to facilitate the effective implementation of the African Continental Free Trade Area (AfCFTA) agreement.
According to him, the use of different currencies by countries on the African continent, characterised by the volatility and seldom trading on global financial markets, made trading among African countries difficult, adding that it could be the biggest barrier to the implementation of the AfCFTA.
President Akufo-Addo made the call in a speech read on his behalf by the Minister of Foreign Affairs and Regional Integration, Ms. Shirley Ayorkor Botchwey, at the second mid-year coordinating meeting of the African Union (AU), the AU Regional Economic Committee and the AU Regional Mechanism held online yesterday.
“The setting up of a Pan-African payment and settlement system to reduce the risk of exchange rate volatility that is associated with cross-border trade and investment is, therefore, very urgent,” he said.
A common payment system, he said, would also foster financial inclusion, which was critical to meeting the Sustainable Development Goals (SDGs) Agenda 2063.
President Akufo-Addo further called on the AU to expedite efforts at collaborating with the Association of African Central Banks and AfroChampions for the establishment of an African Inter-Regional Payments and Settlement Platform to address the issue of the free movement of capital across the continent.
"It is now time to develop financial integration and autonomy for the continent," he said.
Additionally, he urged member states of the AU who had not signed and ratified the legal instrument for the African Investment Bank and the African Monetary Fund to speed up processes of confirmation.
He further called on member states to pay attention to digital infrastructural elements associated with the operationalisation of the AfCFTA in January 2021 in order not to delay its implementation timelines.
President Akufo-Addo commended the Chairperson of the AU, Mr. Cyril Ramaphosa, for his leadership and guidance during this COVID-19 period.
He observed that the pandemic had impacted significantly on African countries that were already battling various challenges.
He said Mr. Ramaphosa’s foresight in appointing special envoys for the AU, who were to coordinate and mobilise resources for the continent, needed to be commended as countries navigated the difficult circumstances posed by the COVID-19.
The President charged member states of the AU to mobilise extra resources to close the fiscal gap occasioned by the pandemic, adding: “This calls for innovation by all stakeholders, including African financial institutions, stock exchanges, central banks and the private sector, by way of proffering short, medium and long-term financing solutions.”
“It is hoped that the AU Commission’s participation in the high-level discussions on financing for development in this era of COVID-19 and beyond will result in a successful negotiation for additional resources to significantly bridge the financing gaps and spur economic recovery,” he said.
President Akufo-Addo hoped that the establishment of an AU financial institution, which is a flagship project of the SDG Agenda 2063 and which also includes the establishment of an African Central Bank, an African Monetary Fund, among other common financial platforms, would result in a recovery phase for many African countries, since many of them had had to commit huge resources to boost their economies.