The Vice-President, Dr. Mahamudu Bawumia, has urged central banks on the continent to position themselves to adopt a digital currency in the advent of digitization.
He said the Bank of Ghana (BoG) was already leading the way by beginning a pilot of digital currency and therefore expected other central banks on the continent to come on board.
“Digitisation and the advent of digital currencies is something that has definitely come and I am very happy that the Central Bank of Ghana is beginning a pilot of digital currency. I think that it will ultimately be the way to go for Africa,” he stated.
The Vice-President said this during an interactive session at the opening of the Fifth Ghana International Trade and Finance Conference (GITFIC) in Accra yesterday.
He said a digital currency that was backed by the central banks provided a lot of credibility to transactions and so “that is where we should be heading.”
Earlier in his opening address, Dr. Bawumia urged central banks to subject their payment systems to a more rigorous regulatory and legal framework and connect directly, national payment systems to the pan-African payment systems to bring all the financial institutions under a single system.
That, he explained, would provide the major catalyst for the continent to move forward.
He indicated that since payments were at the heart of the day-to-day operations of a free trade system, negative spillover effects could be serious if something went wrong.
Vice-President Bawumia said it would also provide an alternative to the current high-cost and long corresponding banking relationships by facilitating trade and other economic activities across African countries through a simple, low-cost, and risk-controlled payment clearing and settlement system.
He was, therefore, hopeful that the roll-out of the pan-African system would synchronize successfully with the payment systems architecture developed by central banks across Africa and bring about a reduction in cost, time variability, and decreased liquidity requirements of commercial banks and central banks settlements.
The conference, which was supported by the Bank of Ghana, GIZ, and the Bank of Africa was on the theme: “Facilitating trade in AfCFTA; The role of the financial services sector,” and attracted participants from industry, trade, and finance from across the continent and beyond.
In recent times, he said, mobile banking had proven to be a more convenient alternative to traditional banking channels with several routine banking and money transactions now being executed through mobile phones and electronic payment systems.
He, therefore, emphasized the need for financial inclusion if the financial services sector was to play its role.
“The implementation of mobile money Interoperability in Ghana has shown that more people can be financially included, and this needs to be rolled out across Africa to ensure the growth of the AfCFTA vision,” he said.
Dr. Bawumia also urged the Association of Ghana Industries (AGI) to help its members build a solid and resilient productive capacity so as to benefit from the AfCFTA implementation.
That, according to him, would complement the effort of the government in providing both the required leadership and investments in implementing the continental trade protocols and related action plans.
Touching on the African Continental Free Trade Area (AfCFTA), Dr. Bawumia said when the African heads of state met in Kigali in 2018 to establish the AfCFTA, their primary focus was to forge and facilitate an economic integration that would provide great opportunities for the approximately 1.3 billion people on the continent.
He said Ghana demonstrated its commitment to that vision by being one of the first countries to deposit its instrument of ratification and also pledged the sum of $10 million in supporting the establishment of the secretariat in the country.
With the commencement of trading under the AfCFTA early this year, the Vice-President said steps towards industrialization were expected to position Ghana on the pathway to becoming a regional manufacturing hub.
Financial sector role
The Chief Executive Officer (CEO) of GITFIC, Mr. Selasie Koffi Ackom, for his part, underscored the significance of the financial sector in every economy and said the role of the sector could not be undermined in the economic growth of any country.
“Politics rules the world but finance rules politics, hence finance is superior,” he stated and said the relevance of financing trade and trade finance in the AfCFTA could not also be ignored.