AfDB proposes critical minerals-backed currency to stabilize Africa's economies

The African Development Bank (AfDB) has proposed a new currency system, the African Units of Account (AUA), backed by critical minerals such as cobalt, copper, and lithium, aiming to stabilize Africa's volatile currencies and attract more investment in green energy. Currently, Africa holds about 30% of the world's critical mineral reserves but receives only 3% of global energy investments, with just $40 billion directed towards green projects last year. The AfDB suggests that by pooling a portion of these mineral reserves, the AUA could provide a stable alternative to local currencies, facilitating easier conversion and reducing capital costs for clean energy projects. This initiative is reminiscent of the former Gold Standard, which provided global currency stability. The AfDB emphasizes the need for Africa to double its clean energy investments to an average of $200 billion annually to reduce carbon emissions and increase electricity production. The proposal also builds upon existing arrangements like the CFA-Euro peg, aiming to enhance Africa's bargaining power in global resource markets.