African currencies in struggle for their lives

Over the past year, resource-endowed African economies hit by the commodities rout have been experiencing exchange rate fluctuations, inflation among other consequences from the deficit in their current accounts. The Nigerian naira lost more than 50% of its value against the US dollar. Across the sub-region to the East, the three biggest economies in East Africa also had their share of currency fluctuations.

Kenya’s shilling lost more than 13% in the space of a year with losses of 8.8% within three months alone.

For the Ugandan and Tanzanian shillings, it was the same fate.

Central and southern Africa are not left out of the currency situation, with similar volatilities in Angola, Zambia and South Africa.

Such scenarios indicate the level of susceptibility that most sub-Saharan Africa economies have to the dynamics of global markets.

Currencies are tools within the larger economic puzzle and for most African countries that have had a successful growth record on the back of commodity exports, these events have exposed an unsustainable economic structure.

There is no better time for African elected leaders to focus on supporting alternative economic structures like those that encourage domestic production.

After all, a country that produces more of what it consumes internally, will have a stronger currency. This thinking should underline the currency-strengthening agenda of African economies.