The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Foreign Exchange

Africa free-trade agreement highlights FX disparities

Increased intracontinental trade in Africa is a laudable objective, but may serve to highlight disparities in exchange-rate regimes that could further widen the gap between winners and losers.

Africa-map-currencies-iStock-960.jpg
Photo: iStock

Since the start of this year, those countries whose parliaments ratified the African Continental Free Trade Area (AfCFTA) agreement and deposited a schedule of tariffs under which 90% of goods and services are traded freely have been permitted to trade under the rules of the agreement.

According to the World Bank, if fully implemented, AfCFTA would boost Africa’s income by $450 billion by 2035, while adding $76 billion to the income of the rest of the world.

[It] will reduce dependence on the dollar by allowing payments between countries to be made in local currencies
Alex Kuptsikevich, FxPro
Alexander-Kuptsikevich-FxPro-580.jpg

But as anyone who has followed the fallout from the UK's exit from the European Union will know, there is rarely consensus on the value of free-trade agreements. In addition, research published by law firm Baker McKenzie and economic forecasting specialist Oxford Economics acknowledged that the agreement would unlock ‘uneven’ growth opportunities on the African continent.

The Brookings Institution published a blog earlier this year by two World Bank economists that described the mix of exchange-rate regimes across sub-regional markets as an impediment to free trade in much of Africa, resulting in substantial misalignments and growth disparities.

Their


You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree