Critical minerals: the AfDB proposes a new standard for Africa

The African Development Bank (AfDB) is proposing a revolutionary new monetary system for Africa, inspired by the gold standard. This system would be backed by essential minerals such as cobalt, copper, lithium, manganese and rare earths, which play a crucial role in the global energy transition and the development of electric vehicles.

Africa has almost 30% of the world's reserves of critical minerals. Yet the continent accounts for only 3% of global investment in energy, and only 2%, or 40 billion dollars, is earmarked for green investment. This situation is partly due to the volatility of the continent's money markets, a problem that the AfDB is seeking to alleviate with the creation of African Units of Account (AUA).

This "non-circulating" currency would make it possible to anchor financial stability and exploit the continent's mining resources by pooling some of the proven reserves of critical minerals. This initiative would enable local currencies to be converted at an agreed rate, thereby strengthening inter-African economic and financial cooperation.

"The idea is inspired by the gold standard, which anchored global monetary stability", the AfDB points out in a recent report. Although the timetable for implementation has not yet been defined, the Abidjan-based institution is detailing for the first time its project, which could transform the continent's financial system.

This mechanism would offer an alternative to traditional currencies in Africa and strengthen the link between the CFA franc and the euro, particularly in French-speaking countries. A basket of essential commodities would ensure greater monetary stability than any existing African currency, according to the AfDB.

Successful deployment of this currency would significantly reduce the cost of capital for clean energy projects. It would also promote financial integration and cross-border cooperation, while strengthening Africa's position in global natural resource markets.

This system could help bridge the continent's $400 billion annual financing gap, while supporting the Sustainable Development Goals (SDGs) and guaranteeing sustainable energy security.

Under the proposed plan, revenue from electricity sales in local currency would be paid to a settlement agent. This agent would then sell an equivalent quantity of minerals to generate dollars, thereby guaranteeing the repayment of loans for energy development projects.

The AfDB's initiative thus marks a major step forward in the financial structuring of the continent. It paves the way for better use of Africa's natural resources and could well redefine the continent's economic landscape for decades to come.