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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.

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Highlights

African nations are vigorously pursuing an integration agenda in order to participate effectively in the globalization process. African leaders therefore view regional integration as a conduit for achieving sustainable economic growth and development and reducing the level of poverty plaguing the continent. In view of the slow pace of continent-wide integration, they have provided a framework for the implementation of the integration agenda. This framework is enshrined in what is known by integrationists around the continent as the Abuja Treaty, which calls for the creation of a continent-wide African Economic Community (AEC) and lays out six stages for the implementation of the integration agenda. Included in this framework is the creation of a monetary union for the continent.

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