Vice President Mahamudu Bawumia says his next big agenda is to pursue a common currency for Africa via mobile money (MoMo) interoperability to enhance intra-African trade.
He noted that the non-availability of a common currency for Africa accounted for the consistent low levels of intra-African trade, averaged 13 percent for intra-African imports and 20 percent for intra-African exports over the past seven years.
He said while the share of intra-African exports had seen a slight increase from 18.2% in 2013 to 19.6% in 2020, the total value of those exports had declined.
Therefore, pursuing a mobile money interoperability for Africa would go a long way to boost intra-African trade, he added.
Vice President Bawumia made these assertions when he delivered a keynote address during the Africa Prosperity Network (APN) Interoperability Symposium in Accra on Friday.
The Vice-President noted that the current settlement processes, which often involve foreign exchange, placed pressure on African currencies.
“Trade payments and relationships are currently hampered by inadequate settlement systems, which result in high costs, limited access, slow processing speeds, and a lack of transparency,” Dr. Bawumia pointed out.
He emphasised the importance of developing efficient domestic payment systems like real-time gross settlement systems and national switches, while also focusing on cross-border interoperability.
Dr Bawumia highlighted Ghana’s experience with mobile money interoperability, which was unveiled in 2018, as a pioneering model to promote financial inclusion.
“Ghana was the first on the continent to introduce mobile money interoperability, not just among telcos but also between telcos and banks,” Dr Bawumia pointed out.
He said the innovation had significantly boosted financial inclusion in the country.
Dr. Bawumia argued that mobile money could serve as a viable alternative to the long-discussed but elusive common currency for Africa.
“Making mobile money interoperable across borders would allow our citizens to trade seamlessly,” Dr Bawumia stated.
He pointed out that the difficulties in achieving a common currency within regional blocs like the West African Monetary Zone due to macroeconomic convergence challenges.
The Vice President called for strong political will among African leaders to drive the initiative.
“Without political will, it is not likely to be achieved. It takes a lot of effort to bring stakeholders together on a common platform,” he said.
He cited the Pan-African Payment and Settlement System, which was developed by the African Union and Afreximbank, as a significant step forward towards promoting interoperability in Africa.
Dr. Bawumia urged African countries to push for interoperability at the continental level, starting with bilateral agreements.
Dr Bawumia said: “Ghana and Nigeria, for example, can begin with mobile money interoperability between the two West Africans countries. We should not wait for the whole continent.”.
The Vice-President, therefore, stressed the potential for mobile money to revolutionise trade and economic integration in Africa.
“If we are serious about a common currency, we can achieve it. Let’s focus on scaling up mobile money at the continental level and help Africa prosper,” Dr Bawumia observed.
Mr Gabby Asare Otchere-Darko, the Executive Chairman and Founder of the Africa Prosperity Network explained the importance of the symposium in driving Africa’s economic integration.
He, thus, highlighted the relevance of digital revolution in the financial sector, particularly the rise of mobile money, which had become a crucial part of daily lives for millions of Africans.
“Mobile money has transformed how business is conducted across Africa,” said Otchere-Darko.
“In 2021, 50% of adults in Sub-Saharan Africa made or received a digital payment, up from 34% in 2017. By 2023, over 500 million consumers had registered for mobile money, with transaction values rising from $337 billion in 2018 to $1.2 trillion in 2022.”
Mr. Otchere-Darko underscored the need for interoperability in mobile money systems to unlock the full potential of the African Continental Free Trade Area (AfCFTA).
“Imagine a young Ghanaian tailor whose clothes on Instagram can be bought by consumers in Zimbabwe using Zimbabwean dollars from their Econet mobile wallet, with the payment received in cedis. The technology exists; what is required is the will to make it happen,” he explained.
He highlighted many mobile operators and financial institutions that operated in silos, thus, creating an environment of limited interoperability.
Mr Otchere-Darko called for African leaders to exhibit political will and commitment of Central Bank Governors to address the issue in earnest.
Mr. Otchere-Darko urged all heads of government, central bank governors, and national communications authorities to support the push for mobile money interoperability.
“Today’s symposium is a step towards unlocking the full potential of the AfCFTA. With concerted efforts, we can build a more inclusive and prosperous Africa. The time to act is now,” he stated.
The symposium was on the theme: “Scaling Up Interoperability — Using Mobile Money to Buy and Sell Across Africa,” brought together stakeholders and leaders aimed at improving economic integration across the continent, including the African Continental Free Trade Area Secretariat and the African Development Bank.
GNA
CA/
July 5, 2024
