Africa’s growth prospects

The African gross domestic product (GDP) should grow, on average, between 5 and 6 per cent in 2019, this is an important growth compared to last year which was nearer to 2.6%.

All of the countries in Africa, Ethiopia and Nigeria deserve a special mention.

Maybe the best stimulating Prime Minister of the whole continent is Dr Abiy Ahmed, 42, who says that Ethiopia will be the next economic power of the African continent. Ethiopia is the second most densely populated country, with a population of 100 millions of people, but its economy has grown rapidly in Africa, in fact its GDP averages between 8-10%.

The Abiy’s unprecedented reforms establishing a peaceful relationship with Eritrea after 20 years of hostility.

The reform concerns: removing the state of emergency, cut the number of ministers from 28 to 20 assuring that half of minister will be women.

In the next few mounts some of the challenges Abiy will have to face are:

  • manage the flow of Eritrea refugees (each month the number of refugees is about 10.000);

  • reduce ethnic tension;

  • prepare local elections this year and national elections next year.

The World Bank’s promise of 1.2 billion dollars to support the budget is an important vote of confidence in Abiy’s reform process by the international community. The Nigerian economy is the most interesting economy in the African continent, thanks to its domestic market size and to its potential development.

After a long period of important growth, in 2014 the Nigerian economy suffered a slowdown due to the fall in the price of oil, which makes up 90% of exports and 80% of state revenue.

Although the negative effects on public accounts which impoverished the foreign currency reserve and the devaluation of the national currency (The Nigerian Naira), the Nigerian Government hasn’t abandoned its investment plans concerning some strategic sectors for the country’s development.

The oil & gas sector and the mining industry are, in general, the pillar of the Nigerian economy.

Beside the oil deposits, of which Nigeria is one of the main producers in the world, Nigeria has a huge gas reserve and important mineral resources that haven’t been fully exploited yet.

Another key sector is that of the infrastructure together with the important project in the civil, industrial sector which the government continues to invest in. The goal of this government is to also improve the logistics and port services.

One of the main priorities of the country is the energetic deficit. The production of electricity doesn’t satisfy all the country’s requirements and there is an important shortage in the transmission and distribution network which needs enlarging and improving. These improvements would mean new opportunities for electrical equipment suppliers.

The rapid urbanization of a large part of the population is the main reason for the huge demand for houses, and public buildings as well as commercial structures. The construction industry is the leading sector for the Nigerian economy, and offers great opportunities which produce building materials, furniture and furnishing accessories.

Farming and agro-industry are the two sectors that the government wants to re-launch. At present the agriculture production doesn’t satisfy the domestic market and even basic food product have to be imported.

There are a lot of opportunities for producers of agricultural and food processing machinery and technology. Banking, finance, telecommunication and ICT sectors are other sector that will grow rapidly in the next few years.


While some of the main world economies fight for grow by implementing with protective mercantile policies, the leadership of the Africa Union (UA) is working to create the widest world’s largest free trade area since the foundation of the World Trade Organization.

Concerns that the Africa Union might become more bureaucratic hasn’t prevented 50 out of the 55 African Nations from signing the AfCFTA (African Continental Free Trade Agreement). This is an international agreement which controls the opening of the borders between African country members. In July 2019, 54 African Nations signed the agreement and 22 ratifications have been obtained to implement the agreement. This agreement imposes the suppression of custom tariffs on a large quantity of goods to promote the exchange of goods within Africa. In fact, custom duties between countries, poor distribution channels, currency difficulties and corruption are the greatest difficulties to overcome in order to achieve a prosperous Africa.

The African currencies

The African continent has 54 states and 41 currencies. Most of these currencies are characterized for the high illiquidity on stock markets and for their volatility. So doing business in Africa in these currencies – from Namibian dollar to rupee of the Seychelles – can represent a great problem because they are expensive and it’s difficult to find them.

For example, many humanitarian organizations which work in Africa are financed with G10 currency, like US dollar or UK sterling. However, helping Sierra Leone to fight ebola means, above all, finding the local currency, the Sierra Leonean Leone. Without a reliable means of exchanging funds in local currency, the NGO and the state aid agencies can’t pay local staff, carry out commercial operations, or finance projects in area that need help the most.

Moreover, the strengthening of anti-money laundering laws means that many banks have cut ties their relationship with African countries where there is a high risk of financial crime and terroristic financing.

This process known as “de-risking” means that many African countries have been excluded from international bank services, including also the currency conversion, which is of concern for the anti-money laundering laws but of utmost importance for the thousands of humanitarian organisations which work in the country.

The CFA Franc

The CFA Franc (at the beginning of 1945 it meant French African Colony Franc, shortened to FACF, today it is the acronym of African Financial Community) is the name of two common currencies in different African countries.

The CFA Franc is the currency used in 14 African countries:

The FAC franc (CEMAC)

  • Camerun

  • Chad

  • Gabon

  • Equatorial Guinea

  • Central Africa

  • Congo

The FAC franc (WAEMU)

  • Benin

  • Burkina Faso

  • Cote d’Ivoire

  • Guinea-Bissan

  • Mali

  • Niger

  • Senegal

  • Togo

Most of these member states were part of the French Colony Empire. Some of these countries (Benin, Burkina Faso, Cote d’Ivoire, Guinea-Bissan, Mali, Senegal and Togo) joined the West African Economic and Monetary Union (WAEMU), while the others (Cameroon, Chad, Gabon, Equatorial Guinea, Central Africa and Congo) joined the Economic and Monetary Community of Central African States (CEMAC).

The FCA franc was created on December 26, 1945, the date on which France ratified the Bretton Woods Agreements. At the time, the name meant Franc of the French Colonies of Africa (Colonie Françaises d’Afrique).

The name, which was changed into “Franc of French Colonies of Africa” in 1958 (without changing the code) today means:

  • The franc of Financial Community of Africa (XOF) for WAEMU;

  • the franc of Financial Cooperation of Central Africa (XAF) for CEMAC.

The presence of two distinctive names marks the division of the area according to the issuing bank, the first one is the BCEAO (Banque Centrale des États de l’Afrique de l’Ouest), and the second one is the BEAC (Banque des États de l’Afrique Centrale). The two currencies are not interchangeable.

The binding agreements between the two banks and the French authorities are identical and include the following clauses:

  • A rate exchange established with the European currency;

  • A complete convertibility of the currency into Euro guaranteed by the French Treasury;

  • A mutual reserve fund of foreign currency to which all countries of CFA will contribute (at least 65% of reserve fund have been deposited at the French Treasury; as bond of exchange rate);

  • In return for the convertibility, the French authorities would participate in the drawing up of the monetary policy in the CFA area.

It is however the Bank of France that continue to guarantee the convertibility of CFA franc and not the European Central Bank.

The Chad President, Idriss Déby, asked to restructure the CFA franc during the celebration of independence of the country in 2017, and other President have done the same.

Ndongo Sanba Sylla, a Senegalese development economist, has written a book about the history of the currency and maintains that the FCA franc allows France to continue the so-called currency imperialism of Africa. He says that the same guarantee which stabilizes the currency has limited the growth, because the FCA franc value is set on the euro rather than being established by the international market.

Sylla says that “the FCA franc is the last colonial currency still in use, considering that France has strict control over the currency – including the devaluation in 1994 – and that French officials sit on board of directors in both Africa communities.

Sylla has also underlined that the French Treasury doesn’t hold foreign currency reserve free of charge but an interest rate of 0.75%.

Sylla suggests that it is as though these African countries are paying the French banks to hold their own money.

On the other hand, supporters of the currency affirm that CFA franc has given stability to new economy, keeping inflation lower than in other countries of the region in turn allowing for the economic growth.

Is a single currency possible?

Which are the potential solutions to the above-mentioned problems?

A long term solution is certainly a single African fiat coin. The fiat coin established a monetary system which allows for the creation of a currency which is theoretically unlimited and is of no cost to the government.

The project of a continent with its own currency was proposed for the first time in 1963, and again more recently, in 2018, by the South Africa President Ramaphosa. It would encourage the local and international trade and would attract substantial foreign investments.

But the 54 sovereign states of Africa are different from each other. A monetary union would require the convergence of many different economic objects including inflation and interest rate.

This without taking into consideration the problems that a convergence of this sort would create. For example, these countries, probably, wouldn’t be able to respond individually to an asymmetrical monetary shock. Considering the structural crises that a single currency could create – actually – its implementation would appear unlikely at present. In order to guarantee that investors, non-governmental organisations (NGO), development agencies and International institutes can continue operating in Africa, a mid-term solution could be to encourage the local African banks to collaborate with international institutes in order to guarantee their compliance procedures are in line with world standards. This solution could remove risks without having to dissolve partnerships, encourage better AML procedures (Anti Money Laundering), implement the IT systems, personnel training and update information producers about Due Diligence of the client. At present a limited monetary union exists between West Africa Francophone States to facilitate an economic integration between the countries that use the CFA franc as currency (with kind of permission of the Communauté Financière Africaine or the African Financial Community).

In 2000, in Ghana, six Anglophone heads of State met to quicken the macro-economic convergence, that was necessary for a single currency within the entire sub-region and to discuss the creation of a second monetary area for English-speaking countries and to discuss the creation of a second monetary area for English-speaking countries.

The final goal was to merge with Francophone countries to create a single monetary union for West Africa.

But the implementation of a single common currency for English speaking countries of West Africa has been postponed for four times before being shelved completely. This was because the convergence criteria set by the Economic Community of the states of West Africa for its member countries had obstacles which were too hard to overcome.

Firstly, all the countries were asked to achieve an inflation of 5% or lower, which proved to be an unattainable goal.

For example, in Ghana, the average annual inflation was almost 17% between 2000 and 2006. Nigeria, the biggest economic in the region registered an average inflation of 12% between 2003 and 2016. Secondly, the regional economic body asked all member countries to achieve a budget deficit to GDP ratios of 4% or lower.

If the convergence criteria are not revised to reflect the real macro-economic situation of single African countries, the idea of a single currency will remain a dream.

In any case the launching of a single currency will require also the creation of new institutions, primarily the Central Bank of West Africa, to manage and supervise the monetary policy for the member countries.

Unfortunately, the search for wealth still drives African politics. So it will be interesting to see how they react when they will lose the sovereignty over the management of money. Nigeria, which could have an important role in the realisation of a single currency, is one of the most corrupt country of Africa. In fact, nine of the most important African countries classified between 101st and 168th as corrupted countries out of a total of 176 countries.

There’s no doubt that a single currency and a central regional bank would, above all, reduce corruption in each countries and would ensure the necessary money to continue important solidarity projects and in doing so help Africa to grow.

Currency trading

The new online trading platform dedicated to Forex are helping to reduce the gap for local African currencies.

In particular, The Crown Agent’s Bank of London has created the platform EMpowerFx, which guarantees an easy access to quotes on over 500 currency pairs at a competitive cost.

The Crown Agent’s Bank specializes in managing liquid currencies and international payments of emerging markets. Its goal is to be the link for the international markets and emerging ones like Africa, The Caribbean, Latin America, Asia Pacific to governments, supranational institutions and NGO.

Technological innovation

The economic growth of Africa in 2019, which will increase thanks to technological innovation in all sectors, coincides with the global trends for a digital and shared economies. A growing interest in the efficient use of resources will lead to innovative opportunities and high growth in Africa.

The commitment of the leading cloud computing companies to create almost a data centres in the continent is fundamental for the improvement of the country. The data centre will permit a large access to resources and advanced processing services lead by artificial intelligence, machine learning and Internet of Thing (IoT). Cloud computing resources will lead to productive economies, and will help the young and rapidly-growing population to create innovative opportunities facing challenges in main sector like health care, transport, trade and education.

It will be necessary to monitor how African politicians will cooperate with the private sector to implement privacy and security, cybersecurity and policies and regulation to protect individuals and institutional data.

Blockchain and the development of a single cryptocurrency

Given the difficulties of the African continent a careful reflection should be made on the possible uses the innovations that Blockchain can bring with it.

Today African governments find themselves in front of a crossroads: they can adopt a warier and restrictive attitude toward new technologies – keeping unchanged their status quo – or they can encourage the epochal changes brought by Blockchain technology.

Let’s start by saying that Blockchain is used in those sectors where players don’t trust each other, where they are interested in different sectors or where there is a shortage of money. In fact, the open source Blockchain decrease corruption, increase trading transparency, automate accounting and improve handling time of goods and payments. Here the potential of Blockchain, with its exchanges guaranteed by cryptology, is vast.

The Blockchain technology is a digitalised ledger which records immutable transitions. It is supported by a computer network which work together and independently to keep and check records. In this way one a record has been written and accepted by every computer in the network it cannot be changed. Therefore, Blockchain technology provides a way of recording, certifying and transferring resources without having to rely on any banks or intermediaries. So Blockchain technology can provide interested parties with a system which organizes and digitalizes this value chain – which becomes unchangeable – and it can provide a quick and cheap access to potential users and/or investors to a multitude of different services.

In Kenya last year, the Supreme Court nullified a controversial election after that electronic voting machine were shattered. For example, voting based on Blockchain could put trust in the elections and in democratic institutions of the continent.

In the African situation, where institutions are weak and inefficient, Blockchain could produce epochal changes in different sectors including:

  • Register unequivocal registry identities to reduce fraud and terrorism risk.

  • Protect property and author rights to fight fraud

  • Reduce contract failure risks

  • Increase a contribution base

  • Traceability and marketing of raw materials of which African countries are very rich

  • Increase trust in financial transactions economizing and speeding up payments.

Furthermore, adopting the single cryptocurrency instead of a fiat coin would provide undeniably a safe medium of exchange and certified by capitals which will be used securely above all in that “black spots” of the economy of a country.

The best solution, meanwhile for the African continent, can’t be the exchange of one fiat currency with another but the implementation of a digital currency which could be linked to some product (a suitable raw material due to its low volatility) or in a group of currencies of the 41 currencies in Africa. This would reduce the fluctuation in value of a new cryptocurrency.

The project isn’t limited simply to the creation of a new cryptocurrency but foresees the development of an entire ecosystem: a global financial infrastructure accessible to billions of people. Despite the many differences, all Blockchains have the following characteristics:

  • They are a decentralized peer-to-peer network, in which all the participants of the network maintain a copy of the digital ledger on their own device.

  • They keep all copies of the ledger constantly updated thanks to a protocol of consent.

Obviously, the main question is: who is authorized to:

  • Read all records on the Blockchain;

  • Write on the Blockchain;

  • Maintain the cohesion, stability, network integrity, that is to say do the job of miner

There are three kinds of Blockchain:

  1. Public or permissionless

  2. Permissioned

  3. Private

This is not a strict classification, in fact the characterising elements of these variations can be combined in a wide variety of models to create personal registers for specific applications.

  1. Public or permissionless Blockchains are so called because no permission is required to enter the network, make transactions or take part in an audit or creation of a new block.

The most famous Blockchains are surely Bitcoin and Ethereum, where there is unrestricted access. Anybody can participate. It’s a decentralized structure, in that there is no central body which manages access authorisation. Access authorisations are shared through all the nodes the same way. No network user has more privileges than another, nobody can control recorded information, change or delete, and nobody can alter the protocol which determines the functioning of this technology. The main worry linked to the public Blockchain is the topic of scalability that is to say how the system can improve as the number of participants increase. This type of network is not a scalable technology: as the number of nodes increases, the transaction speed doesn’t change, but increases the stability of the system making it safer.

  1. Permissioned or authorized Blockchain are subject to a central body which determines who can log in. Apart from determining who is authorised to participate on the network, it also defines the roles that a user can have and establishing the rules on the visibility of the recorded data. So permissioned Blockchain introduces the idea of governance and centralization in a network which is born absolutely decentralized and distributed.

The permissioned Blockchain is commonly called a Consortium Blockchain and instead of allowing anybody who has an interest connection to verify transactions, entrusts the task to a few selected nodes who are considered trustworthy.

It should be emphasized that a permissioned Blockchain is not necessarily also private. In fact, there are different access levels which regard:

  • The reading the ledger, which may be subject to restrictions, for example, only transaction involving the users can be seen.

  • The possibility to propose and make new transaction which are then authenticated and included in the Blockchain.

  • The possibility to actively participate on the network mining to create new blocks.

The characteristics permissioned Blockchain characteristics make them more interesting for big companies and institutions because they are considered safer than public ones and they allow for the required level of secrecy, controlling who has access and who can visualise the recorded data.

The permissioned Blockchain perform better, are quicker, more scalable and cheaper than permissionless ones, as they are smaller and less widespread than others and transaction can be checked by a limited number of users.

  1. Private Blockchain share a lot of characteristics with permissioned ones. In fact, they are private networks, that cannot be seen, which give up decentralization, security and immutability in exchange for storage space, speed of execution and reduction of costs. This kind of Blockchain, managed by a private owner organisation, considered extremely trustworthy by users, can establish who can or cannot access the network and read the recorded data. This organisation which owns the network can change the Blockchain operating rules, rejecting certain transactions which don’t comply with the established rules. The fact that in order to log on, it is necessary to be invited, guarantees a higher level of user privacy and establishes the level of secrecy of the information held.

Private Blockchain can be considered the fastest and the cheapest as the transaction are checked by limited number of nodes, therefore reducing the time required, and so transfer commission are significantly less than those of a Blockchain. In the last few years private Blockchain have had greater success than public ones with private companies and financial institutions thanks to five characteristics:

  1. The Consortium or the body which manages a private Blockchain, if it wants, can easily change the rules, restore transaction, change sales, etc. In some cases, for example the Land Registry, this function is necessary. So the attempt to create a real estate register, uncontrollable by the government, would quickly turn into one that is not recognize by the government itself.

  2. Validators are known, so there is no risk of an attack of 51% arising from a collusion of miners.

  3. Transaction are cheaper, as they can only be by some nodes, which are considered trustworthy and who have a wide processing power. Knowing the miner’s identity implies that their work doesn’t need to be checked and verified by the other nodes, reducing further costs and execution time.

  4. The nodes can be considered well linked and errors can be solved rapidly manually, allowing the use of consensus algorithms which offer finality after much shorter block times.

  5. Reading permission are limited ensuring a higher level of privacy.

These three kinds of Blockchain can be assembled in different ways, to better answer the user’s needs. Below are the most common combinations:

  • Public or permissionless blockchain (unauthorised): the most well-known are Bitcoin and Ethereum. This kind of network allows access to any users who decides to log on and participate, creating new transactions, working as a miners or simply reading the ledger of stored transaction. In this system miners are unknown, so aren’t considered a trustworthy individual.

  • Public permissioned blockchain (authorised) for example Ripple and Hyperledger Fabric. This is a network which works for a community with common interests, and only a small numbers of trustworthy miners can log in. The reading level of the ledger and the participation in the generation new transaction can be restricted or not by the organisation which monitors the Blockchain.

  • Private permissioned blockchain (authorised) for example, Chain and Bankchain. In this case only authorised and certified users can log in, because this Blockchain works exclusively within the limits set by a well-defined community, where all users are known. Usually financial institutions or government agencies are at head of these systems which establish who can or cannot log in. This means that all miners are trustworthy.

In Africa agricultural sector is the main sustenance source for the most of continent’s population and provides an important contribution to the GDP. Technological innovation in agriculture could be a facilitator for development above all regarding a major food safety, for the reduction in poverty and for the total growth of the economy.

The sector is facing a multitude of problems. The agricultural system is fragmented at all levels, from production and livestock farming to the means of transportion to the consumer.

Farmers rarely receive fertilizers and quality seeds, consequently reducing productivity to 10% of the global average for almost all crops.

Furthermore, farmers don’t have access to neither current information about market prices or to trading markets; so the supply and demand isn’t regulated by fair regulatory principles. This gives advantage to intermediaries, who run the market.

Let us not forget that in Africa the agricultural market is due to increase to $1 trillion by 2030. However, the sector is a chain of value without any database for any of the interested parties: farmers, processing and transport companies, insurance companies, financial services providers and governments.

Let us also add that the majority farmers in Africa farm on a small-scale, and most of them don’t have access to a bank account and financial services. So the majority of them don’t have an accounts and therefore cannot prove their creditworthiness. This in turn results in a lack of access to any credit which they need in order to improve their activity. It is the same situation a fortiori with regard to the mining, the production and trading of raw materials.

The current high cost – including transaction cost – aren’t due to the corruption of the intermediaries but also to a lack of an effective system of control and deterrence that Blockchain can introduce.

So the implementation of new technologies could be the suitable solution to help African nations to trade their minerals and natural resources effectively and profitably.

The digitization of Asia Pacific on-line port network model would be another winning move to remove some of the many intermediaries working in the port supply and distribution chain.

In otherwords for Africa to have a better future, it must have a more transparent one which seems possible with Blockchain.

As technology allows the “cutting out” of intermediaries, it would seem that all economic sector will follow peer-to-peer models where transactions aren’t controlled by centralized institution.

Blockchain could become a general purpose technology that is used horizontally like electricity or internet are today, incorporating not only the world of business but also the world of politcs.

How the governments chose to go ahead will be decisive for the future. They need to offer a friendly regulatory environment to cultivatea new generation of African developers.

The African universities should also play their part, developing new projects to teach graduates how implement the technology.

In the meantime, new informative platforms have started up such as, and a consulting and business incubator company, BitHub Africa, based in Nairobi.

African technological companies

Over the last few years a lot of new companies have started up which aim to solve problems, that are limited to some African countries, thanks to solutions based on Blockchain.

For example:

  • Twiga Foods (Kenya) links farmers with sellers in urban centres, facilitating long-lasting partnership, ensuring rapid and safe producer payments to the producers. Together with IBM it has launched a microcredit program to increase its client business turnover.

  • Bit Land (Ghana) makes land registration process immutable. In Ghana where tax fraud is a serious concern, BitLAnd provides a land registry service using Bitshares blockchain, allowing Ghanaians to register their properties, assuming the task of guaranteeing property rights and confirming the transaction made by corrupt and underfunded local authorities.

  • BitPesa (Kenya) is an on line payment platform which permits the transaction in cryptocurrency focusing on the B2B segment. In February 2018 it bought TransferZero, a Spanish money transfer company.

  • Wala (South Africa) proposes crypto solutions to fight the high cost of remittances in/to Africa.

  • Naira Ex (Nigeria), Luno (Uk, South Africa) and Golix (Zimbabwe) are among the most important cryptocurrency exchange in the continent. Just in Zimbabwe because of the lack of foreign currency and the phenomena of hyperinflation. In 2017 Bitcoin reached global record prices.

  • Cointext (South Africa) is a Bitcoin Cash wallet (BCH), which permits the transfer of BCH using short messages (SMS) from any mobile phones, even if they are not a smartphone.

  • Agrikore (Nigeria) strengthened by Cellulant, is an automated market of smart payments, which offers digital financial services and a system that manages client relations for agriculture. Agrikore was developed by using blockchain technology to ensure all stakeholders of the agriculture supply chain can do business in a trusted environment. For the first time Agrikore has linked everyone involved in agriculture: farmers, traders, bankers, and logistic companies in a single transparent ecosystem.

dott. Gian Michele Moschella