A continental payment and settlement platform for African businesses will become operational in the first quarter of 2019, President, African Export-Import Bank (AFREXIMBANK) announced in Abuja on Monday.
Benedict Oramah said the payment platform was one of the bank’s initiatives to eliminate some of the major constraints to intra-African trade.
He was speaking at a panel discussion on “Strategy to deepen Nigeria-Africa trade” hosted by AFREXIMBANK as part of activities to promote the maiden intra-Africa Trade Fair (IATF) scheduled for Cairo, Egypt next December.
“The issue of multiple currencies is one of the constraints to intra-African trade. To eliminate the problem, the Bank resolved that before the single currency system everybody is hoping for, a way must be found where African currencies could be convertible within the geography of the continent
“The bank has set up a pan-African payment and settlement platform to reduce the foreign currency content of conducting intra-African trade. It is intended to make payments under intra-African trade possible in local currencies of all African countries.
“If a Nigerian wants to buy goods from Ghana, the Nigerian will pay for the goods in Naira, while the Ghanaian supplier will get paid in the Ghanaian Cedi. AFREXIMBANK will do the clearing. Only those in debit during the clearing period that would need to pay in dollars,” he said.
This arrangement, Mr Oramah said, would clear multiple buyers within the 55 countries in the continent, since the Bank believed once opportunity for payment in local African currencies was created, a national saving currency would have been established before the planned single currency system in Africa.
Preparatory to the take-off of the platform, he said all consultations have been concluded with the relevant financial experts, with the pilot of the project with the West Africa Monetary Zone in six countries pending when the technology would be ready.
In his contribution, the Commissioner for Trade and Industry, African Union, Albert Muchanga, said the African Heads of State and Government last January opened the protocol on free movement of people, right of establishment and right of residence for signature.
He said the protocol, which has already received about 30 signatures and one ratification, would help remove another big challenge to trade in the continent.
The commissioner said the protocol requires 15 ratifications to become operational.
“We are working towards a programme of Visa-free movement of Africans across Africa as well as the involvement of African passports. Some African countries, namely Nigeria, Rwanda and Kenya, have already taken off with the issuance of Visa-on-arrival to African visitors,” he said.
Besides, Mr Muchanga said the launching of a single African air transport market was in the pipeline, with private sector operators expected to come up with Air Africa Airline that would fly Africa routes.
Again, he said Africa Infrastructure Development Company would soon be established to undertake massive infrastructure development across Africa, in view of concerns that doing business would be difficult without adequate infrastructure.
The Director-General, Nigerian Export Promotion Council (NEPC), Segun Awolowo, said Nigeria’s strategic plan for trade development were included in the country’s Economic Recovery and Growth Plan to diversify the economy and build the productive capacities of the various sectors.
The strategies include those under the National Industrial Revolution Plan, National Enterprise Development Programme and the Zero Oil Plan.
Mr Awolowo, who assured that Nigeria would participate fully in the IATF event in Cairo, said the country was already realising huge value implementing these strategies by way of exportable goods like cement, plastics, herbs, fashion and services.
“The IATF offers a platform for Nigeria to promote trade engagement on a really broad scale in the African region. The trade fair will create opportunity for Africans to meet and know themselves, apart from trade opportunities available for them.
“Its an opportunity for information to flow from commodity producing countries to the markets to enhance intra-African investment opportunities,” he said.