Assessing Regional Integration in Africa III

Towards Monetary and Financial Integration in Africa

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This report finds that although there are some successes, African countries are still experiencing enormous difficulties in achieving the macroeconomic convergence criteria set by their RECs, such as targets on inflation, debt-to-GDP ratio, and deficit-to-GDP ratio. The assessment also indicates that despite some financial developments, African financial market activities remain shallow, with capital markets characterized by low capitalization and liquidity. The report also provides policymakers with recommendations on how to deepen monetary and financial integration on the continent and create an enabling macroeconomic environment for the continent.



Monetary integration in Africa

Regional economic cooperation in Africa dates as far back as the beginning of the last century. The cooperation primarily focussed on the facilitation of international trade and payments, as well as infrastructure. In the process of deepening cooperation, African countries have formed a number of regional economic communities with overlapping memberships. However, the presence of these groupings is yet to translate into a substantial increase in trade within the continent. While the share of African countries’ exports to other African countries grew from about 4 per cent in the 1980s to 12 per cent in the first half of the 2000s, this growth is very low compared to other regional groupings outside the continent. More efforts are needed to promote trade within the various regional economic communities. In addition, there has been very little manufacturing or intra-industry trade, with petroleum, cotton, livestock, maize and cocoa accounting for most of the trade within the continent.


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