Africa 'on track' to converge monetary policy

Jul 15, 2010

African nations are making progress on a plan to converge monetary policy and introduce a single currency.

The Standard quoted Governor of the Central Bank of Kenya Professor Njuguna Ndung'u as saying "commendable progress has already been made in the Eastern African region regarding monetary policy convergence". He was speaking at the meeting of the Association of African Central Banks and noted stage three of the African Monetary Co-operation Programme (AMCP) is currently underway. Its successful implementation will "form a basis for the establishment of a continent-wide common central bank", he explained.

The AMCP began in 2002 and the third stage involves introducing strict macroeconomic convergence criteria - including cutting out central bank credit to governments and an inflation rate of under five per cent - by 2012. However, some experts have expressed doubt over the benefits of a single African currency, with Paul Masson of the University of Toronto quoted by Business Daily as saying the move is "unlikely to yield net economic benefits for all countries", even if trade improves as a result.