Bank chiefs meet in Arusha over African monetary union

Central Bank Governors from more than ten African countries are meeting in Arusha to, among other things, discuss the proposed single currency for the whole continent.

“The African Union (AU) heads of state have directed the continent’s central bank governors to start efforts in creating an African Monetary Union which should lead to the region’s single central bank as well as one currency,” explained Prof Benno Ndulu, the Bank of Tanzania (BoT) governor (pictured).

Governor Ndulu was speaking at the beginning of the 13th ordinary meeting of the Association of African Central Banks (AACB), Eastern Africa Subregion, which is taking place here to address deeper economic integration on the continent, with focus on Africa’s monetary union.

The central bank governors meeting in Arusha include Prof Njuguna Ndung’u from Kenya, Prof Emmanuel Tumusiime-Matebele of Uganda, Mr John Rwangwomba from Rwanda, Mr Melkior Wagara, the Deputy Governor from Burundi, Mr Rundheersing Bheenick of Mauritius and Abdulhakim Said-Ahmed from the Comoros. Others are central bank representatives from Seychelles, Sudan, Ethiopia and hosts Tanzania.

He said there were many challenges facing an African monetary union, including poor or semi-developed infrastructure and suggested that central banks must support financial systems that will fund road and other communication networks in Africa.

AACB intends to both study and harmonise monetary policies that must be put in place before an African Central Bank and a single currency can be created, with initial focus being sometime in 2020 or thereabout.

The move, according to the governor, would enable most African countries to trade freely and help to reduce the exchange rate-related losses incurred by most African traders.

The East African Community (EAC) headquartered at Arusha is so far the continent’s promising regional bloc, which brings together five economies of Tanzania, Kenya, Uganda, Rwanda and Burundi into one.

“We hope that the four African trading blocs of EAC, SADC, COMESA and ECOWAS will spearhead single currency efforts to make it easier for us to join the four monetary unions in forming a single currency than working on the more than 60 currencies being used on the continent,” the governors had pointed out.

So far a panel of experts is said to be working to develop strategies for the creation of the continental central bank, while more drastic economic convergence plans were still being worked out.

Earlier reports had quoted the AU Commissioner for Economic Affairs Mr Maxwell Mkwezalamba, as stating that the proposed African Central Bank was likely to be headquartered in Nigeria. Plans for an African central bank come in the wake of problems caused by the European debt crisis, which is expected to affect African economies on a massive scale due to trade links.
Source: The Daily News, reported by Marc Nkwame from Arusha, Tanzania
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