The suggestion made by Vice-President Dr. Mahamudu Bawumia on Friday to promote mobile money (MoMo) as a single currency in order to boost intra-African commerce casts doubt on the African Continental Free commerce Area’s (AfCFTA) ongoing attempts to establish an African payments system.

It also casts doubt on the resolve of African leaders to realize one of the goals of the Organization of African Union, which is currently known as the African Union (AU): the creation of an African currency.

According to Graphic Online, Dr. Bawumia gave a speech last Friday at the Africa Prosperity Network (APN) Interoperability Symposium in Accra. Dr. Bawumia emphasized the continued low levels of intra-African trade, which over the last seven years have averaged 13% for intra-African imports and 20% for intra-African exports.

He mentioned nations’ failure to meet the kind of convergence standards necessary for the establishment of a unified currency. “We have not had a situation where all of our countries have been able to consistently achieve the key convergence criteria—whether you’re talking about inflation, the deficit, reserves, or depreciation of the exchange rate—it has been difficult,” stated the Vice President.

“If we are serious about it, we can work towards mobile money operability at the continental stage,” Dr. Bawumia went on. Therefore, we ought to switch from the macroeconomic convergence criteria to the convergence requirements for digital payments.

However, Dr. Fareed Arthur, the National Coordinator of the AfCFTA, states that the Pan-African Payment and Settlement System (PAPSS), which is part of the AfCFTA, already exists and is intended to address the same issue.

The Vice President did, in fact, recognize the existence of PAPSS, which was created by the African Union and the African Export-Import (Afrexim) Bank.

 PAPSS
In January 2022, PAPSS, a financial market platform, was introduced. Payments across Africa can now be made without going via correspondent banks outside of the continent. By the end of this year, it will be implemented throughout the Caribbean, with the goal of boosting trade under the AfCFTA.

However, Meron Dagnew, the founder and managing partner of BE Kollective, an Accra-based business that imports Arabica coffee from Ethiopia and exports Ghanaian cocoa and Robusta coffee goods to different markets, disagrees with the Vice President’s idea.

PAPPSS and MoMo are merely financial platforms. PAPPSS enables local currency payments. However, since we must purchase inputs from various locations and the globe trades in dollars, traders do not want to be paid in their own currency, according to Dagnew, who was highlighted in Your Ghana, My Ghana last week.

Dagnew acknowledges that sending money through MoMo is less expensive than sending it in dollars because wire transfers through banks often cost between $75 and $100 each transfer. “However, what makes using MoMo in their currency for purposes other than occasional small transactions?” Says Dagnew.

She went on, “It can help with speed and somewhat lower transaction costs. However, the majority of merchants prefer to be paid in US dollars, so we don’t use MoMo. For this reason, we utilize conventional banks.

Dagnew is adamant about the remedy that African business owners require. “Having our own currency—rather than merely using a platform—is the answer, particularly when we’re exchanging money for it.

Dagnew notes that traditional payment methods must be used because the majority of traders request payment in US dollars. They’re attempting to obtain a payment or transaction platform rather than finding a solution to the issue. MoMo is not a money, Dagnew declared vehemently.

Richard Ahiagba, the NPP’s director of communications, was informed of Your Ghana, My Ghana’s concerns and refuted the claim that the action would divert attention from the establishment of a unified currency.

According to Ahiagba, MoMo’s convenience—as described by Bawumia—would support commerce, raise productivity, and boost employment and GDP development. What it accomplishes is give a short-term transaction platform. The AfCFTA itself got underway without waiting for a single currency.

As a result, this will offer incentives and highlight any gaps that require closing. Additionally, one of them might be aiming to create a single currency in the end. Thus, it will serve as a trigger for addressing some of these issues, and this dialogue will expand with time, Ahiagba said to Your Ghana, My Ghana.

African politicians with a forward-thinking outlook have dreamed of a post-colonial African currency to help with regional integration.

Methodology
In order to achieve economic and monetary integration, the AU plans to oversee the establishment of an African Economic Community, an African Central Bank, and a unified currency while also bolstering current regional economic communities.

A single currency has advantages for both businesses and individual customers, including as stable prices and exchange rates, reduced expenses, and increased trade among member nations. Additionally, it makes it simpler to find the best deals and compare rates across borders, which lowers the cost and lowers the risk of investing in and conducting business.

The loss of national sovereignty and macroeconomic difficulties, such determining the right rate of inflation for a range of different nations, are frequently cited as the drawbacks.

Proponents of economic integration and monetary union in Africa are concerned that not all nations will be open to joining a single currency region or changing their laws to adhere to best practices.

However, it is not unrealistic to think that Ghana can muster the level of political will required to advance the cause of monetary union and economic and political stability in the West African sub-region and on the continent, given its history as an advocate of African independence, its current standing as a beacon of political stability on the continent, and the fact that the country is home to the AfCFTA Secretariat in Accra.