Bawumia proposes MoMo interoperability as Africa's common currency
The Vice President of Ghana, Dr. Mahamudu Bawumia, has proposed that mobile money (MoMo) could serve as a common currency for Africa, addressing challenges associated with intra-African trade.
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He was speaking on Friday at the Africa Prosperity Network (APN) Interoperability Symposium in Accra.
Addressing trade barriers
Dr. Bawumia highlighted the persistent low levels of intra-African trade, which has averaged 13 percent for intra-African imports and 20 percent for intra-African exports over the past seven years.
While the share of intra-African exports has seen a slight increase from 18.2% in 2013 to 19.6% in 2020, the total value of these exports has declined. He noted that current settlement processes, which often involve foreign exchange, place pressure on African currencies.
Need for efficient payment systems
"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 said. He emphasized the importance of developing efficient domestic payment systems, such as real-time gross settlement systems and national switches, while also focusing on cross-border interoperability.
He highlighted Ghana's experience with mobile money interoperability, launched in 2018, as a pioneering model. "Ghana was the first on the continent to introduce mobile money interoperability, not just among telcos but also between telcos and banks," he stated. He said this innovation has 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," he said. He pointed out 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 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, developed by the African Union and Afreximbank, as a significant step forward.
Dr. Bawumia urged African countries to push for interoperability at a continental level, starting with bilateral agreements. "Ghana and Nigeria, for example, can begin with mobile money interoperability between our countries. We should not wait for the whole continent."
In concluding, Dr. Bawumia stressed the potential for mobile money to revolutionize trade and economic integration in Africa. "If we are serious about it, we can achieve it. Let's focus on scaling up mobile money at the continental level and help Africa prosper."
Importance of symposium
For his part, the Executive Chairman and Founder of the Africa Prosperity Network, Gabby Asare Otchere-Darko, emphasized the importance of the symposium in driving Africa's economic integration. He highlighted the significant digital revolution in the financial sector, particularly the rise of mobile money, which has become a crucial part of daily life 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 mentioned that currently numerous mobile operators and financial institutions operate in silos, creating an environment of limited interoperability. Otchere-Darko called for the political will of African leaders and the commitment of central bank governors to address this issue.
Mr. Otchere-Darko concluded by urging 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, themed "Scaling Up Interoperability — Using Mobile Money to Buy and Sell Across Africa," was attended by key stakeholders and leaders committed to enhancing economic integration across the continent including the African Continental Free Trade Area Secretariat, the African Development Bank, and the UNDP Africa.