Johannesburg – The African Continental Free Trade Area (AfCFTA) has introduced a pan-African payments and settlement system to enable intra-African trade in local currency, Wamkele Keabetswe Mene, Secretary-General of AfCFTA, told Daily News Egypt on the sidelines of the BRICS Summit in South Africa.
Mene said the system would allow someone in Egypt to trade with a South African party using the Egyptian pound, while the other party could use South African rand.
“It is a step in the right direction that will allow the African continent to eventually have a common currency,” Mene said.
He added that the system would tackle a significant barrier to intra-African trade, which is that there are more than 42 currencies across the continent.
Regarding the most challenging barriers to intra-African trade, Mene said infrastructure is a significant barrier, as well as the connectivity of regions across the continent.
Another challenge is the lack of free movement of persons, as only four countries have so far ratified the protocol of free movement of persons, which is critical to driving trade, business, and investments, he added.
“We are tackling these barriers,” Mene said. “We hope that over the next 10 years, we can double the intra-African trade, which is currently very low at around 18%.”
The AfCFTA is a free trade agreement between 54 African countries that aims to create a single market for goods and services. The agreement was signed in 2018 and came into force in 2021.
The pan-African payments and settlement system is one of the key initiatives of the AfCFTA. The system is expected to reduce the cost of cross-border payments and make it easier for businesses to trade within Africa.