|HOW TO INTEGRATE THE SINGLE CURRENCY
Now comes the matter of how to create a valuable African currency. Once the decision to go ahead has been made, the money is designed and printed. So now we have 100 billion Sheba delivered from the printers and the mint, and deposited in the AU vault on OAU avenue, and we seen pictures of it on the telly and in the newspapers and the internet, it looks beautiful. What with all the colors and the symbols on it, and the pictures of Africa's historic heroes on it, set against the background of our communities at play or at work...and we are anticipating and proud to have Sheba in our account (if we have an account), or Sheba notes in our pocket if we have a pocket, then what? How do we get Sheba to work?
Do we use the gold standard, the free float, fix a peg and ride on the euro or the dollar, or some other method? Who issues the Sheba, the bank, the currency board, the parliament, private money firms? How do we go about replacing the other currencies now in circulation? (by the way many African states do not accept they own money, unofficially of course). How do we get people to accept Sheba? How do we get the world to accept to exchange African Sheba with US Dollars or Japanese Yen at the bank?
THE GRAIN BANK SYSTEM
I will go straight to the answer without trying to explain the demerits of the alternatives. Our sheba should be guaranteed by African food stocks, specifically grain. This is a simple system that has historic roots in Africa, is easy to manage, is people friendly, and lays the foundation for speedily moving away for dependence and marginalization in the international monetary regime.
The current international currency arrangements are allegedly based on the production levels of the neocolonial economies of the US and Europe, and are allegedly not based on cheap stuff from Africans. Regardless of the curious assumption that the labour and resources or the so called "Less Developed Countries" are not the keystone of the world economy, it seems reasonable to state that food, not petroleum or exports or "precious" metals, rather food is correctly the most precious commodity, without which there is no economy.
It would be prudent therefore to have food as the basis for determining the value of all other commodities. This is in fact the case, but it is generally obscured by a lot of technobabble about incomprehensible and irrelevant market operations (not to worry, most of what happens in the stock markets is mysterious even to the people who work there).
An African currency backed by a coherent food regime is not new. In was used by Africans for thousands of years and it worked well enough, in spite of the fact that we had a monopoly on metals (gold, electrum, silver, cooper etc), that were also used for money. The use of debt certificates and receipts (paper currency) began in Africa, contrary to the usual rhetoric about us. The Garamante, Kushites, Cyreneans, Canaanites and Egyptians shared a sophisticated system of warehouse banking.
Scattered government/temple granaries made a network of grain banks, a network that amounted to a central bank, administered by scribes and priests based in the main temple complex of the ruling state god. The temple grain banks of Amun in Thebes were dominant for most of the time, Amarna for a short while, the temple bank of god Ptah in Memphis, and later Alexandria. In these temple complexes the main accounts from all the state granary banks were recorded. The banking network functioned in such a way that payments were effected by transfer from one account to another, most times without money changing hands. Credit and payments were made on simple instructions with accounts kept for each client (on papyrus or on clay tablets). In other parts of Africa, trust in the system was so well developed that verbal instructions (or established custom when traders didn't understand each others language) took the place of receipts, since cheating would bring disrepute to one's family and community.
In every economy, goods are geared to traditional supply characteristics in terms of how much demand people are going to pressure a particular industry for, how much they are willing to pay, how much credit they can get a hold of, and what their general purchasing and consumption habits are. Whole societies gear up their production system according to this traditional and familiar array of prices and demand. It takes time to change this order. African production is based on primary products. The west has a policy that is written in blood, never to allow Africa to be a competitor on secondary products, unless they actually own the capital and supplies needed to maintain such production in Africa. That is the basis of neocolonialism.
The African currency should be issued on the authority of the Parliament, not executive order. That means that a Parliament appointed Committee for Monetary Policy would serve as the Currency Board and would authorize the Central Bank to increase or reduce the amount of sheba in circulation, or in reserve. At introduction, only a relatively small amount of sheba should be printed or minted, and allowed to circulate across Africa alongside all the rest of our currencies. It should be unforced conversion. Sheba should be left to compete on its own merits, because the weaker currencies (not backed by the African Union) are gradually going to be driven out of the market. As people start to rely more and more on a currency that is easier to use across frontiers, and is backed by the African Development Bank and all the constituent states of the African Union, sheba will gain popularity.
HEY, YOU CAN EAT YOU BANK STOCK TOO!!!
How will the grain banks work? Well, the parliament and the banks in Africa tell the people, 100 sheba is worth a 500 kgs of maize at the community grain bank. The one hundred sheba note is like a gift certificate, or a letter, saying that the government owes you 5 kgs of cereal for every sheba you have. If you should go to any of the national grain banks, and present the sheba note, you will be given the same amount of cereal no matter where you are in Africa.
Of course the supply of grain flactuates too, but it reflects more directly what is going on in the community's economy/ecology, and correcting food gluts or shortages is basic, direct, relevant. The advantages of pegging the value of African sheba on the grain is that it will become harder for foreign markets to manipulate the value of the money in Africa; the authorities will be able to make monetary and fiscal decisions, including currency interventions, without being constrained by how the currency markets will react. The devaluations and revaluations will relate directly to the food situation.
Officials will only have to worry about the amount of food available, and that is a healthy way to spend time (as opposed to fretting about precious metals and currencies that suddenly appear and disappear unpredictably). Moreover, if all hell breaks loose, you can still eat your bank stock (how to beat inflation? Eat!!!), which is not possible in the case of gold or foreign currencies in the bank. At least you will be able to panic on a full stomach, and your kids won't go to bed hungry because there is too much devalued food in the nation. In any case the ability to control financial and macro-economic policy is essential to counter recessions, and is the major benefit of the commodity peg (as opposed to things you can't control, like what the people in the US Treasure are thinking). Ultimately the only things you should worry about are the weather (which the money markets don't own), the grain farmers, the fertility of the soil, and a distribution system to keep your grain banks supplied (a good source of employment for the nation).
Of course the AU government will be compelled to ensure that grain reserves are always in place, balanced, and that they are evenly distributed across the African Union, and that is exactly why a food peg is better than a foreign currency peg, or the gold standard (which is not workable anyway, because it was based on maintaining ridiculously high levels of "free" African labor). It would have been impossible to use the gold standard without slavery or colonial occupation. The industrial revolution of the west was paid for by African slaves and stolen land from Asians, native Americans, Africans, and poor Europeans. The floating exchange rate system has about run its course too. The world is long over due for a correction, essentially because the currencies of the maldeveloped countries of the G7 are way over valued.