East Africa: The creation of a monetary union is not for tomorrow

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The use of the single currency originally planned for 2018 for member countries of the economic community of the countries of Eastern and Southern Africa (COMESA) will have to be projected by 2030. This is reflected in the recommendations made by some of the Governors and Experts from the central banks of COMESA member countries. At the 22nd meeting of the COMESA Central Bank Governors Committee, held in Bujumbura from 27 to 30 March 2017, the aim was to assess the state of Implementation of the project.

“Several COMESA member countries do not observe the criteria for macroeconomic integration,” says Audace Niyonzima Director of Economic Studies and Statistics at the Bank of the Republic of Burundi (BRB). The criteria are twofold, explains the expert. In his view, macroeconomic convergence requires member countries to meet all 13 convergence criteria.

Primary and secondary criteria

These criteria are classified either as “primary criteria” or “secondary criteria”. In the primary category, it was found that achieving the budget deficit target, inflation criteria and external reserves during the months of imports remained the most difficult for member countries. The Director of Statistics at the BRB explains that 14 of the 19 member countries in 2015 have not been reached by the budgetary criterion while 13 countries are for the inflation criterion. Hence the criterion of minimum reserves was not achieved by 16 countries.

“The evaluation of the secondary criteria indicated that the performance of the Member States was not satisfactory in order to achieve stable exchange rates. Challenges then delay the implementation of the monetary union that was planned for the year 2018, “continues Niyonzima.

“Criteria must be realistic”

Some experts and governors of central banks, including the Governor of the central bank of Djibouti, question the political will of leaders in the implementation of monetary union. They point out that countries are not making enough effort to implement Article VI of the COMESA Treaty signed in Kampala, Uganda on 5 November 1993.

This view is not shared by the Governor of the Mauritanian central bank. According to him, the failure to respect the timetable is mainly due to the inadequacy of the criteria. “They must be realistic and adapted to the economic situation of each member country,” he said.

The meeting, which lasted four days, was attended by observers and representatives of the central banks of Burundi, Congo, Djibouti, Egypt, Kenya, Madagascar, Malawi, Mauritius, Sudan, Swaziland, Uganda, Zambia and Zimbabwe. Also in attendance were the COMESA Monetary Institute (IMC), the COMESA Clearing House (CCC) and the Executive Secretary of the Association of Central African Banks (AACB).

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