Event report: Roundtable on single currency and fintech to boost intra-africa trade and enhance AfCFTA implementation

The proliferation of regional trade agreements (RTAs) underscores the increasing need and importance of trade among countries. Indeed, of the key desires from the RTAs is the need to improve the financial sector in the member countries in order to enhance bilateral trade flow.

On this score, the European Union (EU), the African Association for Public Administration and Management (AAPAM), the Pan-African Strategic and Policy Research Group (PANAFSTRAG) and the United Nations Economic Commission for Africa (ECA) organized a hybrid roundtable on the role of single currency and Fintech in boosting intra-Africa trade and enhancing the African Continental Free Trade Area (AfCFTA) implementation. The roundtable, which was held on 23-24 August, 2021 assessed the progress towards a Monetary Union in Africa as a priority for achieving continental monetary policy harmonization leading to a single currency – AFRO – by 2023.

Among others, the roundtable also considered ongoing efforts on making finance work in boosting trade in Africa. While improved financial sector provides finance to facilitate the activities of traders, a huge finance gap of over $330 billion in sub-Saharan Africa remains for Micro, Small and Medium Enterprises (MSMEs). Closing this finance gap will require financial sectors to unleash the needed finance in the form of trade credits as an alternative source of funds to agents involved in trade.

The Making Finance Work for Africa Secretariat (MFW4A) served as the keynote speaker on Making Finance Work for Intra-African Regional and Intra-African Continental Trade: Current State and Trends and presented on how to develop Africa’s financial sector to facilitate greater intra-regional trade in the continent. MFW4A noted that the financial sector’s primary role in trade is to provide affordable finance to agents notwithstanding the trade finance gap. Furthermore, while many global payments platforms may exist, many are unavailable to some African countries. The Pan-African Payment and Settlement System (PAPSS) is the first integrated payments system available across the continent. While this a step in the right direction, more is needed in order to ensure its uptake as usage of digital financial products in Africa is low – 33% of adult population –   according to the Global Findex.

Building on the successes of the PAPSS and AfCFTA, African governments and policy makers could consider integrating their regional financial sectors into the global financial eco-system. MFW4A therefore called for all stakeholders to contribute to the deepening of regional integration of financial sectors, improving on transparency and efficiencies of trade finance.

The event report is available for download.