The West African CFA franc used by 8 independent countries and the Central African franc used by 6 different countries are the two notable ones amongst the different national currencies that are circulated across the African continent. The fixed exchange rate guarantees the relative stability of the currency and at present both of these have been pegged to the Euro. Placed at the end in the list of top 20 most traded currency of the world is the South African rand which is the only local currency of Africa to be placed in the list. Over the years the African currency system has evolved to the currency in the form of paper money from the barter system. Prior to the colonization of Africa, there were multiple forms of currencies used within the continent and these involved some or the other materials, animals and even the people. However, the European colonists introduced a new form of the monetary system in the very beginning of the 17th century. After Africa got its independence in the 20th century, the majority of the countries retained the same currency that the colonial powers had brought here or introduced whilst others had renamed it. By the end of the year 2013, the currency Zambian Kwacha or ZMW was identified as the strongest of all the currencies in Africa.
History of Currency in Africa
Prior to the colonial rule in Africa, the objects used as currency were ingots, shells, salts, gold, cattle, axes, arrowheads, blankets and beads amongst others. In the 19th century while the slave trade was prevalent then one could buy slaves using Manila currency, bronze ring or other ornamental metals. In the colonial period, the several colonial powers introduced their own currencies in the region like Lira in the Italian East Africa and the African Franc amongst others. Post-independence from the colonial rule several countries retained their currencies while the others changed their names. For example, The Nigerian pound replaced the British African Pound and it was then finally changed to Nigerian Naira.
The ever-changing Currency in Africa
The changing currency may symbolize the changing power over a particular region. For example- the use of East African Rupee in East Africa was the result of existing trade relations amongst India and Arabia. However, after the British became principal power over the region then East African Shilling was adopted. Apart from this, there are few countries that resist using the dominant currencies used in their neighboring countries. One such example is the South African Rand earlier used in Botswana was replaced by Botswana Pula in the year 1976. There are many other countries in Africa that haven’t changed their currencies post-independence such as Uganda Shilling used circulated in Uganda is prevalent throughout the country. Majority of the countries in Africa get the appearance of their currency modified whenever the new government takes over and you may find that on the banknotes the picture of the new head of the state appears. In some of the rural areas of Africa, the culture of the Barter system still prevails where the exchange of items takes place in return of the other with similar immediate value instead of using the official currency. Most of the African regions such as West Africa is planning to introduce West African Monetary zone that comprises of the Anglophone countries to have a common currency. In the same way, the member countries of the East African community are looking forward to introducing the single currency i.e. the East African Shilling.
Top Highest Currencies of the African Continent
The strength of any currency is examined through a number of factors that is inclusive of its supply as well as demand, inflation and the foreign exchange market, market forces within a country and even more. The US dollar is recognized as one of the strongest currencies across the world. Thus, it is an appropriate benchmark for measuring the strength of a few African currencies. Let us consider some of the highest African currencies as of now i.e. in the year 2019.
The Libyan dinar
The strongest currency in Africa based upon its purchasing power and the exchange rate with the US dollar is the Libyan Dinar. One US Dollar makes up around 1.38 Libyan Dinars. It is the official medium of exchange in Libya and also the Libyan Dinar is known as LYD in the stock exchange. The Libyan Dinar was introduced into the country’s economy during the year 1971 and it replaced the pound at a similar valuation. It is sub-divided into dirham that was earlier known as milliemes. 1000 dirham makes 1 Libyan Dinar. During the subsequent overthrow of Gaddafi and Arab Spring in the year 2011, the Dinar saw a fall in the valuation. The Libyan Central Bank after the fall of Gaddafi started the process of replacement in the circulation of notes that consisted of the image of the deposed leader at that time.
Tunisia is another Sub-Saharan nation that occupies a leading position in the list of the strongest currencies in Africa. The economy of this Islamic state is dependent on the manufacturing industry of auto parts, agro-allied industry, a thriving tourism sector, and oil to some extent. The population in Tunisia is negligible and its evenly distributed resources account for the high per capita income rate. The currency and economy of Tunisia are stable and is simply doing great in the foreign exchange market.
Ghana, which was earlier known as the Gold Coast is one of the highly developed nations in the West African sub-region. Undeniably, Ghana has the most stable currency and also the strongest in the west African region rising from a very low point. As a nation, Ghana has undergone tremendous transformations not only in the country’s economy but also in the various sectors. The nation’s economy here is rock solid and it is expected to increase exponentially in the coming years if it maintains its current pace of progress. Automobiles, tourism, solid minerals, and several other sectors fairly contribute to the West African Nation’s economic growth.
South Africa Rand
Abbreviated as ZAR the South African Rand is the legal tender that is used in the countries like Swaziland, South Africa, and Lesotho. The South African Rand is the only currency of the continent that is used in four countries officially. Introduced in the year 1961 by the colonial government the South African Rand replaced the South African Pound and was one of the most valuable currencies used across the world. However, the South African Rand got its value deteriorated in the year 1980s due to the international pressure as well as sanctions of the apartheid government. The Rand is subdivided into cents i.e.100 cents make 1 Rand.