Africa proposes minerals-backed currency for stability

The African Development Bank (AfDB) is proposing a new currency system backed by critical minerals such as cobalt, copper, lithium, and manganese—key components in the global shift toward renewable energy and electric vehicles. The 54-nation continent, which holds about 30% of the world’s critical mineral reserves, currently receives only 3% of global energy investments and a mere 2%, or $40 billion, of international green investments annually.

According to the AfDB, the low level of investment is partly due to Africa’s volatile currency markets. To address this, the bank is introducing a “non-circulating” currency, the African Units of Account (AUA), which would be underpinned by critical mineral reserves.

To meet its climate goals and enhance electricity production, Africa must double its clean energy investments to $200 billion annually. Under the proposed plan, countries would pool a set amount of their critical mineral reserves, allowing for conversion of local currencies at an agreed rate.

“The proposal is inspired by the Gold Standard, which once anchored global currency stability,” the AfDB stated in a new report, although it did not specify a timeline for implementation.

First introduced by the AfDB last year, this proposal is now being detailed for the first time. The AfDB noted that the AUA plan expands on the CFA-Euro peg in Francophone countries, which is backed by external reserves. The new currency would be supported by a basket of critical minerals, offering greater stability than existing African currencies.

This move comes as several emerging market countries seek alternatives to the U.S. dollar for international trade. Last week, former U.S. President Donald Trump threatened 100% tariffs on BRICS nations if they attempted to replace the dollar as the global reserve currency.

The AfDB believes the AUA could attract international investment in green energy by mitigating risks associated with currency fluctuations and convertibility. Under the plan, revenues from local electricity sales would be paid to a designated settlement agent, who would then convert them into minerals, generating dollars to repay lenders involved in energy development projects.

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