An African common currency could boost intra-African trade, cut the cost of cross-border payments and give African economies more control over their money, argues Ken Alabi in this paper.

The paper sets out a proposal for a publicly issued African common currency that would work alongside national currencies rather than replace them. Alabi draws on lessons from the US dollar, the euro, the CFA franc and the emerging digital-currency order to propose a step-by-step architecture for African monetary integration.

The paper also connects with The Fifth Element’s thread, Reconciling worldviews across cultures, by inviting reflection on how economic systems express ideas about value, cooperation and institutional power, and how African countries can develop monetary arrangements suited to their own economies and priorities.

Why an African common currency?

The paper identifies three linked challenges to Africa’s economic integration:

• Africa trades far more with the rest of the world than with itself. Only 16% of Africa’s trade is with other African countries.
• More than 75% of intra-African trade is settled in external currencies. Around US$5 billion leaves Africa annually in fees paid to foreign intermediaries.
• African economies have limited control over the external currencies they rely on. Monetary decisions made elsewhere can affect the value of African exports, reserves and savings.

Alabi argues that these challenges reinforce one another and proposes a publicly issued common currency operating on African settlement infrastructure as one way to address them.

How would an African common currency work?

The paper sets out a phased approach to monetary integration:

Expand common payment infrastructure, building on systems such as the Pan-African Payment and Settlement System (PAPSS).

Introduce a common digital unit of account based on a basket of African assets.

Consider a full single currency at a later stage, once the necessary institutions and economic relationships are in place.

The proposed currency would initially rely on liquid reserves. Over time, its backing could incorporate African currencies, gold reserves already held by African central banks and productive-capacity assets such as renewable energy generation. Community-level pilots using existing mobile money networks could test the system before wider adoption.

Would it replace national currencies?

No. The proposed common currency would operate alongside national currencies, providing an additional option for cross-border trade, payments and accounting. Countries would retain their existing monetary arrangements rather than immediately surrendering their national currencies.

Alabi points to the European Currency Unit (ECU), which preceded the euro, as an example of an intermediate stage in monetary integration. He also highlights the importance of a gradual, milestone-based approach that allows participation to grow as the system demonstrates its value.