The African Union plans by 2023 to have central bank, common currency

[Blue3]

Te AU plans to have a common currency and central bank, and be a free trade area, by 2023. It has also already shown it is capable of conducting military operations.

If successful, how will that change geopolitics?

What are its greatest barriers to success?

[Unapologetic Chinaperson]

A lot of West and Central African countries use a common currency already (two actually: the Central African CFA franc and the West African CFA franc). So there is precedence. The East African Community also wishes to roll out their own currency in the next decade or so.

But I doubt an Africa-wide currency will work. There's simply too much economic diversity among the 54 nations of the continent. You have total basket cases like the CAR on one hand and stable economies like Botswana on the other. Heck, even Rwanda and Burundi, two neighbouring mini-states with a long shared history, are becoming more apart, as the former grows while the latter remains mired in violence and corruption. We already see how much trouble this can cause with the Euro, and implementing/maintaining the regional currencies will be hard enough.

[Unapologetic Chinaperson]

Just to get an idea of what I'm talking about, here's some GDP per capita (PPP) figures from 2017:

Central African Republic: 681 USD
Botswana: 18,146 USD

On average, Botswana is 26.6 times richer than the CAR. In comparison:

Greece: 27,776 USD
Germany: 50,206 USD

Germany is only 1.81 times richer than Greece. It's not even a factor of 2! If the Greece-Germany differential can cause enough strain on the Eurozone, imagine how troublesome a common African currency would endure!

[Former President tack50]

A lot of West and Central African countries use a common currency already (two actually: the Central African CFA franc and the West African CFA franc). So there is precedence. The East African Community also wishes to roll out their own currency in the next decade or so.

But I doubt an Africa-wide currency will work. There's simply too much economic diversity among the 54 nations of the continent. You have total basket cases like the CAR on one hand and stable economies like Botswana on the other. Heck, even Rwanda and Burundi, two neighbouring mini-states with a long shared history, are becoming more apart, as the former grows while the latter remains mired in violence and corruption. We already see how much trouble this can cause with the Euro, and implementing/maintaining the regional currencies will be hard enough.

To be fair, wouldn't a common currency make currency more stable and avoid the possibility of a new Zimbabwean dollar scenario, and would put inflation under control in all of Africa?

Of course the disadvantages would be even more felt, but the advantages are probably also larger than what the euro brought.

[Santander]

Good luck with that.

[True Federalist (진정한 연방 주의자)]

There's already the CFA franc which includes many of the weaker African economies. (Technically there are two separate CFA francs, but they've always traded at a 1:1 exchange rate.), It also happens to be pegged to the euro (and before that it was pegged to the French franc), so effectively the CAR is already in a currency union with Germany. The obvious question is would an afrique maintain a peg to the euro and would it be stable without it?

[NewYorkExpress]

Just ask the European Union how the Euro is going.

The UK never joined, and I count at least four, maybe five countries who want to leave (Greece, Italy, Poland and Hungary)

[Former President tack50]

Just ask the European Union how the Euro is going.

The UK never joined, and I count at least four, maybe five countries who want to leave (Greece, Italy, Poland and Hungary)

Neither Poland nor Hungary are in the euro to begin with. And I'd say anti-euro supporters are probably a minority in Greece (though it would be very close). Italy may have a majority of anti euro supporters though

[Blue3]

Just ask the European Union how the Euro is going.

The UK never joined, and I count at least four, maybe five countries who want to leave (Greece, Italy, Poland and Hungary)

Part of the Euro's problem is that there's no central bank... but the AU is planning on one.

[seb_pard]

To have a successful common currency you need to have a common monetary policy (duh!) and fiscal policy, and a shared framework to avoid distortions and mismatches between the countries (because in the case of distressed a country can't devalue its currency). It seems pretty obvious that this monetary union probable would have some problems (and probably with more distortions and issues than the Euro zone) but I think the local currencies are so weak and the CFA franc is clearly not working in favour of African countries so the pros will offset the cons of this policy.

[IceAgeComing]

Just ask the European Union how the Euro is going.

The UK never joined, and I count at least four, maybe five countries who want to leave (Greece, Italy, Poland and Hungary)

1. Poland and Hungary aren't in the Euro (and not even in the ERMII which is the initial process for Euro membership) and so they can't leave something that they aren't a member of

2. Greece has faced significant issues since the economic crisis which demonstrates issues in the way that Monetary Integration was implemented but there is no popular will to move away from the Euro: they've had plenty of chances to demonstrate this in the many elections that they've had

3. Both Lega and M5S dramatically weakened their policies on Euro membership before the last election and currently support retaining the Euro although they want relatively mild reforms - as can be seen in their proposed government agreement (which won't happen now but it demonstrates what they wanted to do).  It certainly isn't likely at all that they leave the Euro any time soon...

Part of the Euro's problem is that there's no central bank... but the AU is planning on one.

...so what is the European Central Bank then, if not a Central Bank?

[🦀🎂🦀🎂]

The most important thing I feel is to have a customs union with some form of unified tariffs. I'm not really a huge fan of such rhibgs, but in cases like Africa, which is dominated by nob-industrial countries dependant economically on raw materials that are exported, they could decently work.

[Lexii, harbinger of chaos and sexual anarchy]

A lot of West and Central African countries use a common currency already (two actually: the Central African CFA franc and the West African CFA franc). So there is precedence. The East African Community also wishes to roll out their own currency in the next decade or so.

The South African Rand is pegged at a 1:1 rate to the currencies of Namibia, Swaziland, Lesotho, and also used in Zim

[Kwal]

With a common fiscal policy, this should work much better than the Euro.

[Silent Hunter]

A lot of West and Central African countries use a common currency already (two actually: the Central African CFA franc and the West African CFA franc). So there is precedence. The East African Community also wishes to roll out their own currency in the next decade or so.

The South African Rand is pegged at a 1:1 rate to the currencies of Namibia, Swaziland, Lesotho, and also used in Zim

Also, there's been a customs union there for over a century.