The LUMI currency has taken off, and talks are currently ongoing between promoters of the proposed African unitary currency and governments across the continent. His Excellency, the Minister of Finance for the Accompong Maroons, Chief Timothy E. McPherson, a leading figure in the pursuit of monetary union for Africa shares his thoughts on the subject with NATHANIEL AKHIGBE. Excerpts:
Why is it difficult for Africa to have a monetary Union?
African Monetary Union is the cornerstone of continental integration and economic emancipation. The mandate and policies for monetary union were enshrined in the OAU Constitutive Act, the 1991 Abuja Treaty, and particularly within the Assembly of Member States for the Single AFRA Payments Area (SAPA) all of which remain an integral part of the African Union policy framework. So structurally and legally, Africa is all set for Monetary Union. However, the criminal legacy of colonialism and its extant institutions has thus far made Monetary Union is difficult for Africa.
What are the impacts of over-dependence on the US dollar and the euro to run the African economies?
The current international monetary system is lacking in economic soundness. The presence of the dollar and the euro within Africa is amongst the leading causes of underdevelopment and poverty for the people of the continent. The reason for this is two-fold: firstly, both the EURO and the dollar are fiat monetary instruments, which by definition constitute worthless paper. This worthless foreign fiat currency is used to acquire gold, diamonds, gems, oil, agricultural goods, and other precious commodities from across the continent. From a monetary framework perspective, every export from Africa is essentially a charitable contribution to the international community. Africa is giving real value and goods in exchange for worthless fiat paper.
Secondly, and quite elementarily, a currency is intended to serve the nation or region of people who issue it. The very idea of using euro, dollars, Chinese yuan, or any other non-African currency to develop the African economy is a great insult to the sovereignty of our people, and completely undermines the mandate of monetary union.
What difference will a single currency for the African continent make?
Africa does not require a “single currency” per se, as a basket of currencies can equally serve the purpose: most importantly we need non-fiat currencies that can be used across the continent. Our ancestors bartered because they were people of great material wealth and substance. Today, the key is to create fungible monetary instruments and currencies with real exchangeable values. Africa will achieve enormous benefits from either a single currency with an underlying asset or a basket of currencies with a fungible underlying value.
Obviously, from the merchant and consumer perspective, transactions are made much easier if you have a single currency that can be used both in Egypt and Zimbabwe, but from an economic perspective, different currencies with parity in the underlying values can achieve the same outcome. The current problem is the usage of fiat money more so than the singularity of currency. This concern is particularly visible in the usage of digital money or electronic money which is already a form of single currency: the real question is what the underlying values of those digits are. If the money is fiat then the answer is zero: the Ugandan shilling is no different than the US dollar in underlying value. However, if the money is measured in an asset class like solar-kilowatt-hours then there is a real underlying value.
If the African Development Bank (AfDB) doesn’t initiate and lead Africa to adopt a single currency, who will?
The African Development Bank lacks both the mandate and the authority to issue a continental currency. Moreover, its diverse foreign shareholdings immediately eliminate it from having the integrity to be an issuer for the continental currency. At present, the AfDB is merely a small investment house with a diverse portfolio. It has no role to play in the discussion of continental currencies.
The only institution on the continent that is formally mandated to issue a continental currency is the African Finance Regulatory Authority (AFRA) which is also the institution responsible for the African Central Bank (ACB).
At the beginning of February 2021, AFRA adopted the LUMI as legal tender for the continent. Although many people are yet to hear of it, the LUMI is the official currency used by the Economic Community of the African Diaspora Sixth Region and now, with its integration into AFRA, it is truly a Global African Currency.
It is in the context of the LUMI that we can seriously begin to discuss the benefits of a single currency. The LUMI currently circulates in 74 countries throughout continental Africa and the International Diaspora community. Through its dedicated payment platform, Swifin, the LUMI allows for easy and direct exchange of money between people on the continent and in the Diaspora: it facilitates commercial transactions both nationally and internationally, allowing for merchants in Zimbabwe to trade with merchants in Egypt and achieve same time settlement in a single currency: it also allows for the vast population of rural people, eighty per cent of whom are currently unbanked, to now have access to bank accounts and instant liquidity.
From an economic perspective, the LUMI satisfies the requirements of a continental currency. It is backed by both gold (4 grains) and solar energy (100kWh), making it not only a powerful instrument of commerce but also a great contributor to infrastructural development and industrialization.
Only as the African population grows in its awareness of the LUMI and begins to comprehensively integrate it into the economy will be able to both witness and experience all the merits of a single currency.
Europe has its own EURO, are their powerful forces working against the reality of a single currency for Africa?
As Africa and the Economic Community of the Diaspora Sixth Region begin to work together hand-in-hand, Europe becomes one trading block amongst many and consequently does not warrant singular consideration.
There are no powerful forces in Europe. We can speak of corrupt European leaders who are keen to continually exploit African resources, but that is not power –that is corruption. From an economic perspective, Europe is completely dependent on Africa and has been for a very long time. This is evidenced by the fact that Europe has little to nothing to offer the African economy, but Africa has everything to offer Europe. We have been giving them economic aid and support for the last 500 years in the form of human labour, agricultural goods, and natural resources just to name a few from the infinite list.
Going forward, we can provide them with solar energy so that they stop polluting the planet, but ultimately we must decrease our aid to Europe and focus on the development of Africa. Europe only seems like a powerhouse with powerful forces because Africa has been asleep.