Free movement of labour and goods to spur business

Business in Africa is expected to increase by large volumes in coming years.

And the continent is expected to attract foreign investments that will significantly spur economic growth.

In a conference on monetary union in Nairobi recently, leading economists from the globe said that once Africa attains a unified currency, trade across it will be boosted.

Ndubuisi Ekekwe of Johns Hopkins University said a common central bank and currency will benefit many member states through synergy and symbiosis.

“A monetary union can increase economic co-operation among member nations and stimulate faster development across the continent,” Mr Ekekwe said.

He said many nations were still oriented to trade with former colonisers in Europe rather than with their immediate neighbours.

While many hurdles exist in the way of the creation of a monetary union for Africa, Kenya’s Permanent Secretary in the Ministry of Planning, National Development and Vision 2030, Edward Sambili, said the continent will come up with appropriate strategies.

Dr Sambili said the challenges will give Africa a chance to formulate robust strategies on a unified currency.

“The European Union faced many challenges in its bid to have the Euro as the common currency. The Africa Union is no different,” he said.

Observers say a monetary union, expected by 2021 according to the AU commissioner of Economic Affairs, Maxwell Mkwezalamba, will lead to a unified market characterised by free movement of capital, labour and goods.

Multinational companies will be the biggest beneficiary of the initiative as creation of a common central bank will lead to removal of transaction charges that have significantly increased the cost of doing business when exchanging from one national currency to another.

This may, however, be a disadvantage to commercial banks as exchange rate gains contribute significantly to their revenues.

Economists at the Nairobi conference said an African currency will add great liquidity to financial markets in Africa.

Dr Mkwezalamba said African governments and companies will borrow money in that unified currency. “This will allow access to more funds.”

Already, discussions on the creation of an African investment bank are underway.