Mr. Wamkele Mene, the Secretary General of the AfCFTA
THE GHANA International Trade and Finance Conference (GITFiC), a policy think-tank, is advocating the adoption of digital currency as a medium of payment under the African Continental Free Trade Agreement (AfCFTA).
According the organisation, with the right legislation, understanding and application, digital currency will become a tool to resolve the inefficiency in Africa’s financial system and bring the benefits of the free trade agreement to the doorstep of the continent’s citizens.
“Digital currency offers an alternative to the current payment system, with fewer challenges in currency convertibility and a more inclusive system that is designed to replace the delay in adopting a single currency,” a new report by the GITFiC said.
It said “incorporating the informal sector into the AfCFTA will not only help these businesses directly but support the wider growth of their countries’ economies.”
The report, “The Impact of Digital Payment Systems In Facilitating Cross Border Trade Under The AfCFTA,” looked at the structure of the digital payment system with focus on adopting a continental single digital currency which is expected to facilitate the operationalisation of AfCFTA.
A research intern from Ashesi University, Bridget Agbenya, presenting the findings of the research, said the adoption of digital currencies such as the crypto payment system under AfCFTA will play a major role in facilitating the cross-border trade by ensuring efficiency in transactions while making these fast and less costly since there was no need for a third party.
“This digital money can often be transferred cheaper, as crypto currencies allow worldwide financial transfer without the need of an intermediary institution or the need of a third currency,” she said adding that the speed of money transfer will be increased by eliminating intermediaries.
Ms Agbenya, inferring from the findings of the research, recommended that parties under the AfCFTA should endeavour to formulate policies to ensure the regulation of the digital currency at it presented a viable means to improving financial inclusion.
“The GITFIC wishes to re-echo the recommendation given by the Vice President of Ghana, Dr. Mahamudu Bawumia at the 5th GITFIC Conference on the need for the PAPSS architecture to allow national banks of state parties to connect so as to ensure seamless operationalisation and financial integration,” she said.
She highlighted that since cross border trade across the continent had been found to be largely informal, programmes should be rolled out to build institutional capacity among stakeholders and businesses particularly, in the informal sector.
“Following the announcement by the BoG to pilot a digital currency, it is recommended that periodic impact assessments are undertaken, and such finding shared with the AfCFTA Secretariat and the monetary zones on the continent,” she stated.
By Jamila Akweley Okertchiri