Banks

Who makes our currency and why? | Africa | DW

A few months ago, a Gambian delegation visiting the Central Bank of Nigeria asked if the Gambian Dalasi could be printed in its West African neighbour. Gambia’s central bank governor Buah Saidy said the country was short of money.

The small West African country had to review its currency after the defeat of former president Yahya Jammeh in the 2016 elections. Yaya Jammeh, who reigned for 22 years, had his own image on the Gambian banknotes.

After its fall, the Gambian Central Bank therefore undertook to destroy these banknotes.

Today, dalasi banknotes depict a fisherman pushing his canoe out to sea, a farmer tending to his paddy field, and some colorful native birds.

A problem remains however: The Gambia does not print its own currency. She places orders with British companies, which often leads to a shortage of cash.

Bolivar, currency of Venezuela

Read also →CFA Franc (5): The fantasies around a controversial currency

A very secure operation

And The Gambia is not the only African country to have its currency printed abroad.

More than two thirds of the 54 countries in Africa print their currency elsewhere, mainly in Europe and North America.

Among the main companies approached are the British banknote printing giant, De La Rue, the Swedish company Crane and the German company Giesecke+Devrient.

It is perhaps surprising that almost all African countries import their currencies. This practice could even raise questions of sovereignty and national security.

Most countries don’t talk about their money printing process, probably for security reasons. Print shops are even less transparent.

The Naira, currency of Nigeria

The Naira, currency of Nigeria

None of the companies contacted by the DW wanted to answer our questions.

Ethiopia, Libya and Angola – along with 14 other countries – place orders with De La Rue, said Ilyes Zouari, president of the Center for Study and Reflection on the Francophone World.

Six or seven other countries, including South Sudan, Tanzania and Mauritania, are said to print their currencies in Germany, while most French-speaking African countries are known to print their currencies with the French central bank and the French printing press. Oberthur Trustee.

Read also →”The CFA Franc, the last colonial currency in the world”

Significant costs

It is not known exactly how much it costs to print African currencies like the dalasi. For example, the US dollar costs between 6 and 14 cents per note to print.

It is therefore likely that the cost of printing for more than 40 African currencies is significant.

In 2018, an official from Ghana’s central bank complained to local reporters that the country was spending huge sums on its UK orders of the Ghanaian cedi.

Still, analysts say the fact that African countries print much of their currency abroad is not unusual.

The euro, the common currency of several European countries

The euro, the common currency of several European countries

Many countries around the world do this. For example, Finland and Denmark, like hundreds of central banks around the world, print their currency abroad because there are not many companies with this know-how.

Only a handful of countries, such as the United States and India, produce their own currency.

Read also →The sovereign bolivar, new currency in force in Venezuela

Mma Amara Ekeruche, from the African Center for Economics Research, told DW that when a country’s currency is not in high demand – and not used around the world like the US dollar or the pound sterling – it is financially unwise to print it at home due to the high cost involved.

Money-printing machines typically produce millions of banknotes at a time. Countries with small populations, such as Gambia or Somaliland, would have more money than they needed if they printed their own banknotes.

If a country prints a ten euro note at home and sees that it can print it for around eight euros abroad, why would it incur the extra cost to do so? It wouldn’t make sense”explains the economist.

Some countries, such as Liberia, do not attempt to print their own currency because they do not even have a printing press, which is expensive to install and requires special technical skills.

Only a handful of African countries, such as Nigeria, Morocco and Kenya, have sufficient resources to print their own currency or mint their own coins, and even they sometimes supplement their production with imports.

The US dollar is printed in the USA

The US dollar is printed in the USA

Read also →Should the foreign exchange reserves of the CFA franc be withdrawn from the French Treasury?

The risks of an operation

Another concern, according to economist Mma Amara Ekeruche, is that some countries trying to produce their own currencies could fall victim to corrupt officials or hackers who might try to falsify or manipulate them. In many cases, production overseas is safer.

But with importing, there can also be security challenges. Containers of Liberian dollars shipped from Sweden disappeared in 2018 in the port of Lagos.

Read also →ECO, which country to print the future currency?

In addition, the British company De La Rue, founded in 1821, produces banknotes for central banks around the world.
It therefore has the tools and experience necessary to keep abreast of innovations in money, such as the use of polymers which are considered cleaner, more durable and safer than paper, the plastic material allowing include more sophisticated features to protect against counterfeits.

But overseas printing is not without its drawbacks. Some countries could find themselves hit by economic sanctions. In 2011, for example, the UK withheld orders for Libyan dinars from De La Rue, after the UN sanctioned late leader Muammar Gaddafi.

Banknotes of Sudan

Banknotes of Sudan

Read also → Shortage of tickets in Burundi

Lack of confidence

Printing banknotes in Africa would increase profits on the continent and, at least in theory, African countries could choose those with printing capacity as there is likely to be unused capacity.
But this is not the case in practice. “This is due to trust issues between countries“, estimates Emmanuel Asie du-Mante, former deputy director of the central bank of Ghana.

And there is the complicated case of Francophone Africa – the countries using the Central African CFA franc and the West African CFA franc. These currencies are closely linked to the euro and are produced in France.

Yet there is hope for change on the horizon. With Gambia’s central bank officials proposing a possible partnership with Nigeria, countries could start looking inwards for their foreign currency orders. If it happens on a large scale, it could greatly reduce shipping costs.

Read also →CFA Franc (4): “ECOWAS single currency could be worse” (Ndongo Samba Sylla)

About the author

on100dayloans

Leave a Comment