African bloc to promote use of local currency to boost trade
Updated: June 14, 2022 10:10 p.m. STI
Nairobi [Africa]June 14 (ANI/Xinhua): The African Continental Free Trade Area (AfCFTA) said on Tuesday that it will encourage the use of local currencies to boost trade among African countries.
Prudence Sebahizi, Chief Technical Advisor at the AfCFTA Secretariat, told reporters in Kenya’s capital Nairobi that currently most intra-African trade is settled in US dollars.
“With the use of local currencies, the number of financial transactions will increase while the time taken to make payments will reduce, which will boost trade among African states,” Sebahizi said at the EABC Private Sector Regional Consultative Meeting. -Trade Mark East Africa on the African Continental Free Trade Area (AfCFTA) and Tripartite Free Trade Area (TFTA).
Trade under the AfCFTA, which began in January 2021, aims to create the world’s largest free trade area in terms of the number of participating countries with a combined population of around 1.3 billion. inhabitants.
So far, 43 out of 55 African countries have ratified the continental trade pact.
Sebahizi said the trading bloc has partnered with the African Export and Import Bank (Afreximbank) to establish the Pan-African Payments System to facilitate the use of local currencies in intra-African trade.
He revealed that piloting the use of local currencies for trade among African countries had started with six West African countries.
“The pilot test worked well and in total 20 African countries have committed to join the pan-African payment system to facilitate the use of local currencies,” he added.
Sebahizi observed that using local currencies for trade will also encourage small and medium enterprises to engage in intra-African trade.
“Most small businesses are unfamiliar with international financial systems that rely on foreign currencies. Using local currencies for intra-African trade will allow small businesses to make and receive payments in their national currency,” he said. (ANI/Xinhua)