Across the world, policymakers are entering a challenging period of recovery and growth in the wake of the pandemic, with the effects of this most likely to be felt in developing economies like Africa.
According to the International Monetary Fund (IMF), policymakers in such regions should continue to provide economic support for its vulnerable residents without promoting instability in the financial marketplace.
But what’s the precise role of policymakers in boosting the African economy, and what steps can they take to aid the region going forward?
The Role of African Policymakers Through History
When African nations started to gain independence through the 1960s, the main economic objective was to transform raw commodities as a way of increasing and adding value to goods.
More specifically, individual countries looked to create an integrated production structure, manufacturing goods from start to finish and selling these at optimal margins.
In regions such as Senegal, for example, the government placed a strong focus on clothing and textiles, investing heavily in the production of cotton while introducing spinning, weaving, knitting and drying facilities to help create viable products.
Of course, such an approach was supported by decidedly protectionist economic policies and
large government intervention, which largely persisted throughout Africa until recent times.
African Economic Challenges and the Solutions
While policymakers in Africa have remained relatively unrestrained throughout Africa, the recent decision to create a sweeping free trade area comprising more than 1.2 billion people and a combined GDP of more than £2 trillion has stripped away tariffs and some points of central control.
This agreement, known as the African Continent Free Trade Area, has followed years of negotiations, while it should definitely hope to resolve the challenges facing the region’s economy in terms of protectionism and overly intrusive policy making.
However, some challenges that remain include the size of the unbanked population in Africa, with an estimated 95 million people (or 57% of the population) not having access to a traditional bank account or fiscal services.
Some argue that the answer here lies in the form of cryptocurrency, including both decentralised assets like Bitcoin and government-backed tokens such as the eNaira in Nigeria.
While the former assets are tradable through your forex account complete with a $30 no- deposit bonus, both afford users access to digital funds seamlessly online and negate the need for traditional bank accounts and lenders.
In the case of decentralised currencies, such assets also negate the role of facilitating middleman and transaction fees in most cases, while they epitomise the best of free market economics and can prosper without policy making decisions.