The African Continental Free Trade Area (AfCFTA) on Tuesday said it will promote the use of local currencies in order to boost trade amongst African countries.
Prudence Sebahizi, the Chief Technical Advisor at the AfCFTA Secretariat told journalists in Nairobi, the capital of Kenya that currently most intra-Africa trade is settled using the U.S. dollars.
“With the use of local currencies, the number of financial transactions will increase while the time it takes to make payments will reduce thereby boosting trade amongst African states,” Sebahizi said during the EABC-Trade Mark East Africa regional private sector consultative meeting on the African Continental Free Trade Area (AfCFTA) and Tripartite Free Trade Area (TFTA).
Trading under AfCFTA which commenced in January 2021 aims at creating the largest free trade area in the world in terms of the number of participating countries with a combined population of about 1.3 billion.
So far 43 countries out of 55 African countries have ratified the continental trade pact.
Sebahizi said that the trading bloc has partnered with the African Export and Import Bank (Afreximbank) to establish the pan African payment system to facilitate the use of local currencies in intra-Africa trade.
He revealed that piloting for the use of local currencies for trade amongst African countries began with six countries in West Africa.
“The pilot test worked well and in total 20 African countries have made commitments to join the pan African payment system in order to facilitate the use of local currencies,” he added.
Sebahizi observed that use of local currencies for trading will also encourage small and medium size enterprises to engage in intra-Africa trade.
“Most small firms are not familiar with international financial systems that rely on foreign currencies. The use of local currencies for intra-Africa trade will allow small companies to make payments and receive payments in their domestic currencies,” he said.
Source: Xinhua Press Agency