Trade among African countries is facing additional challenges related to the high cost of currency conversion, further delaying the full implementation of the continent’s free market, a new report says.

 

The Mo Ibrahim Foundation, in a report titled ‘Africa on the Move: Boosting Mobility and Connectivity,’ says currency conversions alone are costing the continent $5 billion every year.

This increases the cost of intra-Africa trade, which is still grappling with other barriers such as custom procedures, regulatory divergences, border management issues and high cost of transport and operations.“Africans pay a premium, especially those who live in countries whose currencies are not easily convertible into major international currencies such as the US dollar or the euro. African citizens must often convert several times from their home currencies into intermediate currencies and then finally their desired currency, losing out on the exchange rate at each stage,” says the May 2026 report.“Africa loses approximately $5 billion per year to currency conversion costs.”The full implementation of the African continental free trade area (AfCFTA) agreement is projected to boost intra-continental trade to 53 percent, from around 18 percent of Africa’s current trade, grow the manufacturing sector by $1 trillion, generate income worth $470 billion, and create 14 million jobs by 2035.

The agreement, one of the main flagships of the African Union’s Agenda 2063, entered into force in May 2019, aiming to create the world’s largest single market by progressively eliminating tariffs on most goods, reducing non-tariff barriers (NTBs), harmonising trade regulations, and improving trade-related infrastructure.

The Mo Ibrahim report, however, says limited currency convertibility prevents swift trade operations.“Both the AfCFTA Secretariat and RECs (regional economic communities) are working on these challenges, which require strong political commitment at country level, and could also benefit from exchange of expertise and best practices from other economic unions,” it says.

The report says the Pan-African Payment and Settlement System (Papss), which was launched in 2022 by the AU and the African Export-Import Bank (Afreximbank), is key instrument to resolving the long-standing issue of African countries trading with one another using foreign currencies and has become a core part of Africa’s current financial architecture.

Papss is a centralised payment and settlement platform that allows business to pay and for recipients to receive funds in their own local currencies through an African institution, rather than a foreign bank.

This process removes the need for full currency convertibility by handling conversion within a dedicated system and using central banks as settlement anchors.

Even if a currency is not internationally traded, if it is recognised within Papss, it can be traded with at a fairer rate.“Overall, this system reduces US dollar dependence, improves monetary sovereignty as countries and boost the continent’s financial integration by moving it closer to a single payments market without requiring an intermediary currency or even a single pan-African currency,” the report says.

Additionally, the report says soft mobility of goods and services around the continent, which is key to facilitating intra-continental trade, is strangled, not only by customs fees but by numerous NTBs, often “behind the border,” such as sanitary and phytosanitary barriers, labelling and packaging standards.

The report notes that free movement of people, goods and services is key to both economic integration of and regular migration within the continent.“Enhanced mobility and connectivity are both key to accelerate continental integration and the swift implementation of the AfCFTA, as well as to facilitate and encourage regular migrations within the continent.”The AfCFTA is making progress reducing tariff barriers across the continent, trade and mobility are often still blocked by NTBs such as custom procedures, regulatory divergences and border management issues.

It envisioned creating a fully integrated African Economic Community through six sequential stages over roughly 34 years, culminating in a single African market with free movement of people, goods and services, a central bank, and eventually a continental monetary union with a single currency by 2028.

The treaty’s logic was that strong regional economic communities such as the Economic Community of West African States (Ecowas), Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (Comesa) would first integrate internally, then gradually merge to form continent-wide institutions.

The pan-African currency goal is part of the final stages, requiring macroeconomic convergence, harmonised fiscal policies, and the establishment of an African central bank.

Although the treaty set 2028 as the target year, progress has been slower than envisioned, and achieving a single currency by that deadline is now considered unrealistic.

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