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African currency was originally formed from basic items, materials, animals and even people available in the locality to create a
medium of exchange In economics, a medium of exchange is any item that is widely acceptable in exchange for goods and services. In modern economies, the most commonly used medium of exchange is currency. The origin of "mediums of exchange" in human societies is ass ...
. This started to change from the 17th century onwards, as
Europe Europe is a large peninsula conventionally considered a continent in its own right because of its great physical size and the weight of its history and traditions. Europe is also considered a Continent#Subcontinents, subcontinent of Eurasia ...
an
colonial powers Colonialism is a practice or policy of control by one people or power over other people or areas, often by establishing colonies and generally with the aim of economic dominance. In the process of colonisation, colonisers may impose their relig ...
introduced their own
monetary system A monetary system is a system by which a government provides money in a country's economy. Modern monetary systems usually consist of the national treasury, the mint, the central banks and commercial banks. Commodity money system A commodity m ...
into the countries they invaded. As
Africa Africa is the world's second-largest and second-most populous continent, after Asia in both cases. At about 30.3 million km2 (11.7 million square miles) including adjacent islands, it covers 6% of Earth's total surface area ...
n countries achieved independence during the 20th century, some retained the new denominations that had been introduced, though others renamed their currencies for various reasons. Today, inflation often creates a demand for more stable (but forbidden) foreign currency, while in rural areas the original bartering system is still in widespread usage. As of 1 March 2019, the
Libyan dinar The dinar ( ar, دينار (); sign: LD in Latin, ل.د in Arabic; code: LYD) is the official currency of Libya. The dinar is divided into 1,000 dirhams (). It is issued by the Central Bank of Libya, which also supervises the banking system ...
(LYD) has the strongest currency in Africa.


History


Pre-colonial era

In pre-colonial times, many objects were sometimes used as currency in Africa. These included shells, ingots, gold (gold dust and gold coins (the Asante)), arrowheads, iron, salt, cattle, goats, blankets, axes, beads, and many others. In the early 19th century a slave could be bought in West Africa with manilla currency; multiples of X-shaped rings of bronze or other metal that could be strung on a staff.


Colonial era

During colonial times (roughly from 1680 to 1990) the respective colonial powers introduced their own currencies to their colonies or produced local versions of their currencies. These included the
Somali shilling The Somali shilling (sign: Sh.So.; so, shilin; ar, شلن; it, scellino; ISO 4217: SOS) is the official currency of Somalia. It is subdivided into 100 ''senti'' (Somali, also ), ''cents'' (English) or (Italian). Overview Early history The ...
; the
Italian East African lira The lira AOI was a special banknote circulating in Italian East Africa (''Africa Orientale Italiana'', or AOI) between 1938 and 1941. Data When Fascist Italy imposed the Italian lira in Ethiopia in 1936, it decided upon a rate of 3 lire = 1 th ...
; and the African franc (in Francophone countries). Many post-colonial governments have retained the name and notional value unit system of their prior colonial era currency. For example, the
British West African pound The pound was the currency of British West Africa, a group of British colonies, protectorates and mandate territories. It was equal to one pound sterling and was similarly subdivided into 20 shillings, each of 12 pence. History In the 19th ...
was replaced by the
Nigerian pound The pound was the currency of Nigeria between 1907 and 1973. Until 1958, Nigeria used the British West African pound, after which it issued its own currency. The pound was subdivided into 20 shillings, each of 12 pence. The Nigerian pound (whic ...
, which was divided into shillings, before being replaced by the naira.


Modern day

A different trend was seen when the predominant foreign power relationship changed, causing a change in the currency: the
East African rupee The rupee was the currency of Britain's East African colonies and protectorates between 1906 and 1920. It was divided into 100 cents. The rupee replaced the Indian rupee, which had previously circulated. In 1920, the rupee was revalued against st ...
(from long-term trade with Arabia and India) was replaced by the East African shilling after the British became the predominant power in the region. Other countries threw off the dominant currency of a neighbour: the Botswana pula replaced the
South African rand The South African rand, or simply the rand, ( sign: R; code: ZAR) is the official currency of the Southern African Common Monetary Area: South Africa, Namibia (alongside the Namibian dollar), Lesotho (alongside the Lesotho loti) and Eswatin ...
in Botswana in 1976. Some countries have not changed their currency despite being post-colonial, for example Uganda retains the
Ugandan shilling The shilling ( sw, shilingi; abbreviation: USh; ISO code: UGX) is the currency of Uganda. Officially divided into cents until 2013, due to substantial inflation the shilling now has no subdivision. Notation Prices in the Ugandan shilling ...
. Many African countries change their currency's appearance when a new government takes power (often the new head of state will appear on bank notes), though the notional value remains the same. Also, in many African currencies there have been episodes of rampant inflation, resulting in the need for currency revaluation (e.g. the Zimbabwe dollar). In some places there is a thriving street trade by unlicensed street traders in
US dollar The United States dollar ( symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the officia ...
s or other stable currencies, which are seen as a hedge against local inflation. The exchange rate is grossly more favourable to the seller of the foreign currency than is the official bank rate, but such trading is usually illegal. In many rural areas there is still a strong bartering culture, the exchanged items being of more immediate value than official currency (following the principle that one can eat a chicken, but not a coin). Even where currency is used, haggling over prices is very common. This is in contrast with the pre-independence
Rhodesian dollar The Rhodesian dollar (''R$ or Rh$'', ) was the currency of Rhodesia between 1970 and 1980. It was subdivided into 100 cents. History The dollar was introduced on 17 February 1970, less than a month before the declaration of a republic on 2 Ma ...
which was always a strong currency linked to the British pound.


Regional currencies


Continent

There is a proposal for a monetary union of the entire African continent, which would call for the creation of a new unified currency, similar to the
euro The euro ( symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens . ...
. The hypothetical currency is sometimes referred to as the ''afro'' or ''afriq''. In April 2021, Wamkele Mene, Secretary General of the AfCFTA said: "I don't know how long it will take for Africa to have a common currency. It may not happen in our lifetime, but we have got to start somewhere to address the multiplicity of currencies as a constraint for intra-Africa trade".


West Africa

The West African Monetary Zone (WAMZ) has proposed to create a common currency for all
West Africa West Africa or Western Africa is the westernmost region of Africa. The United Nations defines Western Africa as the 16 countries of Benin, Burkina Faso, Cape Verde, The Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali ...
states, the Eco. In May 2020, an agreement between the French government and 8 West African countries was reached, meaning to change the CFA franc to the Eco; though no plan has been established as of January 2021. However, due to the impacts of the
COVID-19 pandemic The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identi ...
,
Côte d'Ivoire Ivory Coast, also known as Côte d'Ivoire, officially the Republic of Côte d'Ivoire, is a country on the southern coast of West Africa. Its capital is Yamoussoukro, in the centre of the country, while its largest city and economic centre ...
president
Alassane Ouattara Alassane Dramane Ouattara (; ; born 1 January 1942) is an Ivorian politician who has been President of Ivory Coast (Côte d'Ivoire) since 2010. An economist by profession, Ouattara worked for the International Monetary Fund (IMF)East Africa East Africa, Eastern Africa, or East of Africa, is the eastern subregion of the African continent. In the United Nations Statistics Division scheme of geographic regions, 10-11-(16*) territories make up Eastern Africa: Due to the historica ...
, the member countries of the
East African Community The East African Community (EAC) is an intergovernmental organisation composed of seven countries in the Great Lakes region of East Africa: the Democratic Republic of the Congo, the United Republic of Tanzania, the Republics of Kenya, Buru ...
planned to introduce a single currency, the East African shilling until 2012. Following delays, this was later postponed to 2024.


Present currencies


See also

*
List of central banks of Africa There are two African currency unions associated with multinational central banks; the West African Banque Centrale des États de l'Afrique de l'Ouest (BCEAO) and the Central African Banque des États de l'Afrique Centrale (BEAC). Members of bot ...


Notes


References


External links


Profile of the African UnionList of All Currencies Country Wise
{{DEFAULTSORT:African Currency * de:Wirtschaft Afrikas#Afrikanische Währungen