Central banks play crucial role in African economies

Tuesday, August 15, 2017

President Jacob Zuma says monetary policy has a role to play in the development of African economies.

“Monetary policy has an important role to play in the development of our economies and the continent in general,” said President Zuma on Tuesday.

Addressing the opening ceremony of the Association of African Central Banks (AACB) 40th ordinary meeting of the assembly of governors, the President said a stable macroeconomic environment is essential for economic growth.

“Maintaining price and financial stability are two of the key characteristics in this regard,” he said during the ceremony of the AACB, which is a continental body that was formed in 1963.

President Zuma said the gathering of the AACB happens at a time when the global economy is still trying to shake off some of the negative legacies of the global financial crisis. While the international community has since put measures in place to restore sustainable global growth and strengthen the international financial system by reforming international financial regulations, vigilance is still needed to ensure that the growth momentum is maintained and financial markets are resilient.

“African economies are integrated into the global economy and as such, we are forced to bear the brunt of adverse international economic developments. This meeting provides an excellent opportunity for the exchange of ideas around the role that central banks can play to address deficiencies and constraints so as to enhance growth in the different African regions,” said the President.

The Head of State encouraged the AACB -- whose main objective is to promote cooperation in the monetary, banking and financial spheres in the interest of maintaining price and financial stability in Africa -- to pay particular attention to the role that central banks and monetary policy can play.

He told the symposium held at the South African Reserve Bank’s Conference Centre in Tshwane that central banks have an important role to play in promoting inter-continental trade. The banks also have a role to play in linking payment systems across the continent, developing a well-functioning and efficient banking system and promoting cross-border banking and capital flows.

President Zuma said the African Union’s Agenda 2063 is premised on the view that a prosperous Africa is based on inclusive growth, sustainable development; good governance and a strong focus on regional integration.

What is crucial for the development of the continent is integration into the continental and global trade.

However, the President also spoke of the recent move towards more protectionist policies, saying these could have implications on the pace of globalisation going forward.

President Zuma said the association has made tremendous progress since its establishment, a notion that was also expressed by SARB Governor Lesetja Kganyago, who is also Vice Chairperson of the association.

“Our continent has made remarkable progress in developing the building blocks for integration. Most successes, however, have been at a regional level. Examples of the regional cooperation arrangements include the West African Monetary Zone, the West African Monetary Institute and the successes that we have seen in Southern Africa,” said Kganyago.

He said central banks within the Southern African Development Community (SADC) have also launched a payment system integration programme that culminated in the implementation of the SADC Integrated Regional Electronic Settlement System (SIRESS).

To date, SIRESS (which is a cross-border settlement service for SADC countries) has cleared in access of R4 trillion in tractions.

“It is our hope that the development of such initiatives will lay a solid foundation for facilitating trade and investment in Africa,” said Kganyago.

AACB Chairperson and Governor of the Central Bank of Nigeria, Godwin Emefiele, said despite global and domestic challenges the Eurozone crisis including Brexit may be threatening the foundation of regional integration across the world.

“However I’m certain that we can draw lessons from the EU experience and intensify collective efforts in order to establish a viable monetary union for our continent,’ said Emefiele.

The last time the AACB meeting was held in South Africa was on 16 August 2001. – SAnews.gov.za

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