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Silas Ongudi

This document discusses the challenges facing regional economic integration and monetary coordination in Sub-Saharan Africa. It finds that small economies, high inflation, unstable exchange rates and financial fragility have hindered countries from achieving targets like the UN's Millennium Development Goals. While regional blocs have made progress promoting cooperation and trade, they still face obstacles to deeper monetary integration. Challenges include a lack of clear monetary convergence criteria; membership in multiple overlapping blocs; confused trade policies; and vulnerability to external shocks. The document recommends strengthening capacity and institutions, clarifying integration agreements, and creating common payment and banking systems based on realistic metrics to further regional coordination goals.

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Towards Macroeconomic Convergence and Monetary Coordination: Challenges to Regional Integration in Sub Saharan Africa 1st Maseno University Interdisciplinary Conference 30th June-1st July 2014, Maseno hotel, Kisumu Okech, S.O., Ngigi, M., Basweti, E. and Okeyo, B.O.
Introduction Regional integration- Engines of sustainable growth Small nature of economies High inflation Instability of exchange rates Financial fragility The poor state of infrastructural services Outcome: Non-achievement of UNDPs MDGs Therefore, promoting macroeconomic integration (Monetary Union) is urgent in Africa
Introduction contd Africa: Present: 8 regional integrations (EAC,SADC,ECCAS,ECOWAS,IGAD,UMA,CEN -SAD,COMESA) Promoting economic cooperation, Intra regional trade bargains (Market access) Management of shared infrastructure among members These blocs are considered to have made some real progress and are assumed to be on track to the achievement of the 2025 target of Monetary Union
Introduction contn With many ups and downs, a keen attention to their position today in terms of monetary convergence plan Pre-requisite: Urgent shift in approach and perceptions in overcoming the obstacles faced by their mentors-European and American integrations
RESULT AND DISCUSSION: TRADE LEVELS (2004-2014) -10 0 10 20 30 40 50 60 70 80 1 2 3 4 5 6 7 8 9 10 11 Averagetradevolumes(ImportsandExports) Year Volume of intra-regional trade in EAC and SADC countries (Billions) SADC Exports SADC Imports EAC Exports EAC Imports
RESULT AND DISCUSSION: UNDERLYING INFLATION (EAC-<5%) Country 2000 2005 2007 2008 2009 2010 2011 2012 2013 2014 Uganda 4.5 8.6 6.07 12.04 13.07 3.97 18.68 14.02 5.44 6.28 Tanzania 6.2 4.36 7.03 10.28 12.14 7.19 12.69 16 7.87 5.23 Rwanda 3.9 9.12 9.08 15.44 10.35 2.31 5.67 6.29 4.22 4.07 Kenya 6.8 7.82 4.27 15.1 10.55 4.31 14.02 9.38 5.72 6.59 Burundi 24.3 1.2 14.42 25.97 4.62 4.09 14.89 11.99 8.84 5.95 Average 9.14 6.22 8.174 15.766 10.146 4.374 13.19 11.536 6.418 5.624
SADC: Inflation (Target: Single digit -2008) SACU incl. CMA 2001 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Botswana 6.6 8.61 11.55 7.08 12.623 8.12 6.95 8.46 7.53 5.76 3.8 Lesotho 6.9 3.44 6.08 8.01 10.716 7.38 3.60 4.99 6.18 5.31 4.66 Namibia 9.3 2.26 5.05 6.73 10.351 8.78 4.47 5.05 6.54 6.17 5.9 South Africa 5.7 3.39 4.69 7.09 11.536 7.13 4.27 5 5.65 5.75 5.98 Swaziland 7.5 1.75 5.2 8.08 12.657 7.45 4.509 6.12 8.94 5.62 5.52 Mauritius - 4.82 8.93 8.83 9.731 2.52 2.93 6.53 3.85 3.48 3.85 HIPCs Congo D.R. 357.3 21.39 13.21 16.72 17.97 46.22 23.46 15.54 2.13 0.81 2.37 Malawi 27.2 15.41 13.90 7.96 8.71 8.43 7.41 7.63 21.27 27.71 15.11 Mozambique 9 6.43 13.25 8.16 10.33 3.26 12.70 10.35 2.09 4.21 5.6 Tanzania 5.2 4.34 7.25 7.028 10.28 12.14 7.19 12.69 16.00 7.87 5.23 Zambia 21.7 18.33 9.02 10.66 12.45 13.39 8.5 8.66 6.58 6.98 7 Madag. - 18.36 10.77 10.36 9.17 8.96 9.28 10.02 5.81 5.83 6.22 In crisis Congo D.R. 357.3 21.39 13.21 16.71 17.96 46.22 23.46 15.54 2.13 0.81 2.37 Zimbabwe 76.7 -31.52 32.97 - 72.73 156.96 6.22 3.05 3.47 3.72 1.63 1.46 Angola 152.7 6.7 22.96 13.31 12.25 12.47 13.721 14.48 13.48 10.29 3.78 7.66
RESULT AND DISCUSSION: CURRENT ACCOUNT DEFICIT (Excl. grants)/ GDP ratio): Target: (-<5%) EAC 2000 2005 2007 2008 2009 2010 2011 2012 2013 2014 Burundi -7.0 -4.91 -5.36 -0.98 1.72 -12.20 -13.62 -17.26 -23.22 -21.51 Kenya -3.4 -1.46 -3.95 -6.51 -5.51 -7.35 -11.16 -10.45 -8.31 -9.62 Rwanda -3.3 1.01 -2.23 -4.88 -7.29 -5.42 -7.24 -11.44 -7.31 -11.54 Tanzania -5.3 -6.63 -10.95 -10.23 -9.76 -9.30 -14.55 -15.86 -14.29 -13.93 Uganda -6.5 -2.52 -5.53 -8.71 -7.34 -11.07 -12.49 -10.47 -11.67 -12.56
CHALLENGES TO MU Lack of monetary convergence criteria as a target (UEMOA, CEMAC, ECOWAS, EAC and SADC) Membership to several blocs with competing and overlapping visions Confused policies and tariff rules: importation Lack of cost-benefit analysis criteria, low political commitment and internal consultation countries Vulnerability to internal and external shocks Slow trade and mobility of factors of production
POLICY RECOMMENDATION Prior internal consultations (public sector, private sector and civil society) Strengthening technical capacity and human capacity for informative analysis Creating of enabling institutional environment to attract finances for integration reduce socioeconomic policy divergence Clarity of integration treaties, leadership, protocols and priorities Creation of common clearing house and central bank based on clear and realistic measurement parameters
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Maseno conference

  • 1. Towards Macroeconomic Convergence and Monetary Coordination: Challenges to Regional Integration in Sub Saharan Africa 1st Maseno University Interdisciplinary Conference 30th June-1st July 2014, Maseno hotel, Kisumu Okech, S.O., Ngigi, M., Basweti, E. and Okeyo, B.O.
  • 2. Introduction Regional integration- Engines of sustainable growth Small nature of economies High inflation Instability of exchange rates Financial fragility The poor state of infrastructural services Outcome: Non-achievement of UNDPs MDGs Therefore, promoting macroeconomic integration (Monetary Union) is urgent in Africa
  • 3. Introduction contd Africa: Present: 8 regional integrations (EAC,SADC,ECCAS,ECOWAS,IGAD,UMA,CEN -SAD,COMESA) Promoting economic cooperation, Intra regional trade bargains (Market access) Management of shared infrastructure among members These blocs are considered to have made some real progress and are assumed to be on track to the achievement of the 2025 target of Monetary Union
  • 4. Introduction contn With many ups and downs, a keen attention to their position today in terms of monetary convergence plan Pre-requisite: Urgent shift in approach and perceptions in overcoming the obstacles faced by their mentors-European and American integrations
  • 5. RESULT AND DISCUSSION: TRADE LEVELS (2004-2014) -10 0 10 20 30 40 50 60 70 80 1 2 3 4 5 6 7 8 9 10 11 Averagetradevolumes(ImportsandExports) Year Volume of intra-regional trade in EAC and SADC countries (Billions) SADC Exports SADC Imports EAC Exports EAC Imports
  • 6. RESULT AND DISCUSSION: UNDERLYING INFLATION (EAC-<5%) Country 2000 2005 2007 2008 2009 2010 2011 2012 2013 2014 Uganda 4.5 8.6 6.07 12.04 13.07 3.97 18.68 14.02 5.44 6.28 Tanzania 6.2 4.36 7.03 10.28 12.14 7.19 12.69 16 7.87 5.23 Rwanda 3.9 9.12 9.08 15.44 10.35 2.31 5.67 6.29 4.22 4.07 Kenya 6.8 7.82 4.27 15.1 10.55 4.31 14.02 9.38 5.72 6.59 Burundi 24.3 1.2 14.42 25.97 4.62 4.09 14.89 11.99 8.84 5.95 Average 9.14 6.22 8.174 15.766 10.146 4.374 13.19 11.536 6.418 5.624
  • 7. SADC: Inflation (Target: Single digit -2008) SACU incl. CMA 2001 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Botswana 6.6 8.61 11.55 7.08 12.623 8.12 6.95 8.46 7.53 5.76 3.8 Lesotho 6.9 3.44 6.08 8.01 10.716 7.38 3.60 4.99 6.18 5.31 4.66 Namibia 9.3 2.26 5.05 6.73 10.351 8.78 4.47 5.05 6.54 6.17 5.9 South Africa 5.7 3.39 4.69 7.09 11.536 7.13 4.27 5 5.65 5.75 5.98 Swaziland 7.5 1.75 5.2 8.08 12.657 7.45 4.509 6.12 8.94 5.62 5.52 Mauritius - 4.82 8.93 8.83 9.731 2.52 2.93 6.53 3.85 3.48 3.85 HIPCs Congo D.R. 357.3 21.39 13.21 16.72 17.97 46.22 23.46 15.54 2.13 0.81 2.37 Malawi 27.2 15.41 13.90 7.96 8.71 8.43 7.41 7.63 21.27 27.71 15.11 Mozambique 9 6.43 13.25 8.16 10.33 3.26 12.70 10.35 2.09 4.21 5.6 Tanzania 5.2 4.34 7.25 7.028 10.28 12.14 7.19 12.69 16.00 7.87 5.23 Zambia 21.7 18.33 9.02 10.66 12.45 13.39 8.5 8.66 6.58 6.98 7 Madag. - 18.36 10.77 10.36 9.17 8.96 9.28 10.02 5.81 5.83 6.22 In crisis Congo D.R. 357.3 21.39 13.21 16.71 17.96 46.22 23.46 15.54 2.13 0.81 2.37 Zimbabwe 76.7 -31.52 32.97 - 72.73 156.96 6.22 3.05 3.47 3.72 1.63 1.46 Angola 152.7 6.7 22.96 13.31 12.25 12.47 13.721 14.48 13.48 10.29 3.78 7.66
  • 8. RESULT AND DISCUSSION: CURRENT ACCOUNT DEFICIT (Excl. grants)/ GDP ratio): Target: (-<5%) EAC 2000 2005 2007 2008 2009 2010 2011 2012 2013 2014 Burundi -7.0 -4.91 -5.36 -0.98 1.72 -12.20 -13.62 -17.26 -23.22 -21.51 Kenya -3.4 -1.46 -3.95 -6.51 -5.51 -7.35 -11.16 -10.45 -8.31 -9.62 Rwanda -3.3 1.01 -2.23 -4.88 -7.29 -5.42 -7.24 -11.44 -7.31 -11.54 Tanzania -5.3 -6.63 -10.95 -10.23 -9.76 -9.30 -14.55 -15.86 -14.29 -13.93 Uganda -6.5 -2.52 -5.53 -8.71 -7.34 -11.07 -12.49 -10.47 -11.67 -12.56
  • 9. CHALLENGES TO MU Lack of monetary convergence criteria as a target (UEMOA, CEMAC, ECOWAS, EAC and SADC) Membership to several blocs with competing and overlapping visions Confused policies and tariff rules: importation Lack of cost-benefit analysis criteria, low political commitment and internal consultation countries Vulnerability to internal and external shocks Slow trade and mobility of factors of production
  • 10. POLICY RECOMMENDATION Prior internal consultations (public sector, private sector and civil society) Strengthening technical capacity and human capacity for informative analysis Creating of enabling institutional environment to attract finances for integration reduce socioeconomic policy divergence Clarity of integration treaties, leadership, protocols and priorities Creation of common clearing house and central bank based on clear and realistic measurement parameters