Via VoxEU, Thorvaldur Gylfason writes:
Does every country in Africa need a currency of its own? No. Because national currencies constitute an exchange and trade restriction, a further reduction of the number of currencies in Africa would likely encourage trade and growth in Africa. This is why the African Union aims at pooling all the continent’s currencies into a single currency by 2028. In the meantime, several regional monetary unions are on the drawing board, and two monetary unions already exist, one de jure and the other de facto. First, fourteen countries belonging to the Economic and Monetary Community of Central Africa and the West African Economic and Monetary Union use the CFA franc. Second, Lesotho, Namibia, Swaziland, and now Zimbabwe use the South African rand. Botswana used the South African rand for ten years following independence, 1966-76, before introducing the pula.
... A strive for efficiency dictates the use of fewer and larger currencies and so do foreign investors who are understandably wary of weak and volatile currencies. This centripetal force is opposed by a centrifugal force rooted partly in national pride but also, more importantly, in the belief that sovereign national currencies make it possible to pursue independent and flexible monetary policies to foster economic and social development. This was the vision of Nigeria’s leaders in 1973, even if things turned out differently.
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