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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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Developments in Africa’s regional integration

There is no doubt that integration remains a key strategy for Africa to transform itself from a continent of mainly least developed and developing countries to a strong united bloc of developed nations and a global force. The need for integration in Africa is unquestionable and indeed strategic in terms of promoting and protecting Africa’s interests. It is imperative to widen the region’s economic space so as to generate economies of scale for production and trade and to maximize the welfare functions. This is basically why the numerous regional economic communities (RECs) have been created, and why African political leaders have held at heart the goals of both the Abuja Treaty establishing the African Economic Community and the Constitutive Act of the African Union.

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