It is almost impossible to imagine European Union officials receiving their salaries in a currency other than the euro, which has become an emblem of European identity and unity. But African Union employees, especially those in professional and senior positions, are predominantly paid in dollars. That is because the AU, burdened by the legacy of institutional, political, and economic fragmentation, has yet to leverage fully the catalytic potential of monetary integration and all the benefits that come with it, from lower transaction costs and exchange-rate risk to higher cross-border trade and investment.
Fragmentation has been a persistent obstacle to lasting peace and prosperity across Africa, especially in the current global environment, where influence is determined largely by market and population size, as well as political strength. This lack of cohesion has high costs, as shown by Africa’s failure to develop a unified response to US President Donald Trump’s tariff tantrums. It has exacerbated the continent’s formidable development challenges. It has fueled political conflict, causing millions of deaths. And it has kept intra-continental trade dismally low, increasing countries’ vulnerability to global volatility and external shocks.
Moreover, a chronic infrastructure deficit has become a permanent feature of African economies, owing to their inability to pool financial and human resources for large-scale projects. For example, Sub-Saharan Africa has the world’s lowest road-network density and the lowest rate of electricity access globally, despite its vast energy potential. Around 600 million Africans still lack reliable access to electricity.
Monetary fragmentation impedes the development of liquid financial markets, forcing African countries to issue debt in foreign currency. This distorts risk perceptions and substantially raises debt-service costs, creating a financial death trap that is difficult to escape. The resulting strain on public finances leaves African governments with little fiscal space to invest in productive infrastructure, including the cross-border projects that are necessary to boost competitiveness and sustain the growth of labor-intensive manufacturing industries. A lack of access to financing is now the most significant constraint on development across Africa.
The costly consequences of fragmentation, which have reduced African countries to arenas of competition rather than independent actors on the geopolitical stage, have become too significant. Overcoming these costs requires deepening integration, which would improve Africa’s economic and security prospects, strengthen its resilience and capacity for effective coordination, and elevate its position on the global stage.
Through integration, African countries can pool resources to fund regional highways, rail networks, energy systems, and other large-scale development and infrastructure projects. This collaborative, cross-border approach would help reduce unit costs and better manage risk, in turn boosting industrial production, encouraging intra-African trade, and generating high investment returns, thereby making these projects more economically viable.
Greater integration would also enhance intelligence-sharing and security cooperation between African countries, which is especially important on a continent where many threats – like terrorism in the Sahel – transcend borders. By treating instability as a common concern, a formidable collective entity could undertake robust military and diplomatic measures. Contrary to expectations, sharing authority and resources to address security challenges would bolster sovereignty by promoting African-led solutions and curtailing foreign interference.
A more united Africa can avoid “diversified dependency,” whereby primary commodities and natural resources still dominate African exports even as trade shifts eastward toward China and India. By creating the conditions to attract long-term investment, integration would enable the continent to diversify its sources of economic growth and trade. Investors would leverage economies of scale to sustain high growth rates and returns. The development of regional value chains would deepen cooperation and trade by sharing production across countries based on comparative advantage.
Despite the obvious benefits of African integration, progress on this front has been slow and inconsistent. For example, implementation of the African Continental Free Trade Area, which began operating in 2021, has been sluggish and uneven. It took four years of negotiations to achieve a consensus on rules of origin, even though they are intended to catalyze industrialization and boost both external and intra-African trade.
African countries face a classic prisoner’s dilemma, in which individual gains undermine mutual benefits. While cooperation among African governments would yield substantial benefits, some worry that opening their markets will expose domestic industries to stronger competitors and reduce revenue. As a result, they often prioritize national interests over regional commitments.
Regional institutions’ inability to enforce decisions is deepening the dilemma. In 2024, Moussa Faki Mahamat, the chair of the AU Commission at the time, lamented that a staggering 93% of the resolutions the organization adopted between 2021 and 2023 were not implemented.
Several other factors exacerbate the problem. Asymmetries between African economies fuel fears that integration will not lift all boats. Overlapping regional organizations create conflicting obligations, while weak enforcement mechanisms mean that there are few, if any, penalties for breaking commitments. Moreover, reliance on external donors creates incentives that work against internal cooperation. As a result, attempts at integration in Africa frequently resemble a one-shot game rather than the repeated interactions required to develop trust and reciprocity.
But cooperation is no longer an option; it is an imperative. Africa’s continued development, relevance, and sovereignty in a multipolar world depend on it. But effective integration must begin with an acknowledgment of the continent’s institutional credibility gap stemming from the historical legacy of monetary fragmentation. It is this legacy that explains why the AU and similar institutions enter into economic agreements and business contracts denominated in dollars.
This must change. Continued reliance on a vehicle currency prevents the AU from leveraging the potential of monetary integration to bolster continental unity and, perhaps more importantly, undermines its credibility in spearheading the integration agenda. Only by pursuing integration can Africa hope to transform its demographic advantages and resource wealth into sustainable development and global influence.
Hippolyte Fofack
Hippolyte Fofack, a former chief economist at the African Export-Import Bank, is Parker Fellow at the Sustainable Development Solutions Network at Columbia University, a research associate at Harvard University’s Center for African Studies, a distinguished fellow at the Global Federation of Competitiveness Councils, and a fellow at the African Academy of Sciences.
Copyright: Project Syndicate, 2026.
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