African central bank governors seek continental monetary integration

African central bank governors seek continental monetary integration

Xinhua

ALGIERS– African central banks’ governors urged here on Thursday for speeding up the process of monetary integration in Africa, as a step towards achieving the goals of creating the African Central Bank (ACB) and ultimately issuing an African single currency.

Representatives from 31 African central banks, in addition to some from African and international institutions, met on Thursday at the 36th ordinary session of the Assembly of Governors of the Association of African Central Banks (AACB) in the Algerian capital.

Members of the assembly elected Governor of the Algerian Central Bank, Mohamed Laksaci, as the new head of Assembly of Governors of the AACB, replacing Charles Chuka of Malawi’s Central Bank after his four years term ended.

Laksaci told a press conference that he will focus on “setting up monetary cooperation between the African central banks.”

“We have also to develop a shield that would permit the African central banks to face the repercussions of foreign financial shocks,” Laksaci said, in reference to the current soaring commodity prices in international markets.

The ACB is one of the three financial institutions of the African Union (AU). Over time, it will take over responsibilities of the African Monetary Fund.

When it is fully implemented via Pan-African Parliament legislation, the ACB will become the sole issuer of the African single currency, regulate and supervise the African banking industry, and set the official interest and exchange rates in conjunction with the African governments’ administration.

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Video: The East African Community’s plans for the adoption of a single currency among its 5 member states

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Video: Pan-African Parliament

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The Financial Institutions  
The African Union has created three  financial institutions in a bid to facilitate trade within the continent. They  are : the  African Investment Bank (AIB), the African Monetary Fund  (AMF) and the African Central Bank (ACB).

1. African Investment Bank  (AIB)

The African Investment  Bank is one of the three financial institutions planned for in the Constitutive  Act of the African Union. The mandate of the African  Investment Bank was envisioned to aid in fostering economic growth and  accelerating economic  integration in Africa in line with the broad objective of the  African Union.
  To achieve these objectives, the  Bank will carry out the following tasks:

i) Promote investment activities of the  public and private sector intended to advance regional integration of the  member States of the African Union;
ii) Utilize available resources for the  implementation of investment projects contributing to the strengthening of the  private sector and the modernization of rural sector activities and  infrastructures;
iii) Mobilize resources from capital  markets inside and outside Africa for the financing of investment projects in  African countries; and
 iv) Provide technical assistance  as may be needed in African countries for the study, preparation, financing and  execution of investment projects.
 
The Headquarters of the African  Investment Bank is Tripoli, Great Socialist People’s Libyan Arab Jamahiriya.
A formal agreement with the host country to establish a  Steering Committee in order to commence technical studies on the institutional  and organization aspects of the Bank was signed . The mission of the technical  steering committee is to spearhead studies leading to the setting up of the  bank, including working out the fine-print details of its sources of funding,  management and institutional framework.

2. African Monetary Fund (AMF)

The African Monetary Fund (AMF) is  stipulated in the Abuja Treaty in the Constitutive Act of the African  Union, Article 19, , in a bid to facilitate the integration of African  economies, through the elimination of trade restrictions and enhance greater  monetary integration.

The main objective of the African Monetary Fund is to:
  a) Provide financial assistance to AU  Member States;
  b) Act as a clearing house as well as  undertake macro-economic purveyance within the continent;
  c) Coordinate the monetary  policies of Member States and promote cooperation between the monetary  authorities in these states; and
  d) Encourage capital movements between  member states; amongst others.
  The Headquarters of the African  Monetary Fund is in Yaoundé, Republic of Cameroon.

A Memorandum of Understanding to set  up a Technical Steering Committee to undertake the implementation for the  hosting of the African Monetary Fund was signed on 30 June 2008, between the  African Union Commission and the Cameroon Government, at the margins of the 11th  Ordinary Session of the African Union Summit of Heads of States and Government  that took place in Sharm El Sheikh, Arab Republic of Egypt.

3. African Central Bank (ACB)

The African Central  Bank was created following the 1991 Abuja Treaty and reiterated by the  1999 Sirte Declaration that called for the speeding up of the implementation  process.
The ACB, just like the  other African financial institutions, is aimed at building a common monetary  policy and create the African currency as a way for accelerating economic  integration in Africa.

The objective of the  African Central Bank would be to:

a) Promote international monetary cooperation  through a permanent institution;
b) Promote exchange stability and avoid competitive  exchange rates depreciation;
c) Assist in the establishment of a multilateral  system of payments in respect of current transactions between members and  eliminate foreign exchange restrictions which hamper the growth of world trade
 
The Headquarters of the African Central Bank is  Abuja, Republic of Nigeria.