An analysis of financial and monetary cooperation in Africa

Abstract

There is no doubt that there is still a long way to go before financial and monetary cooperation can be firmly established in Africa. Since the introduction of the euro, the perceived pressure on African governments to set up similar arrangements has increased, despite the fact that institutional and other structural conditions are quite different. In parts of Africa, there is certainly a tendency to view financial and monetary integration as the best possibility for bringing about faster political integration The current struggles of the West African Monetary Zone to achieve convergence give ample indication of the difficulties facing the region as it seeks to achieve financial and monetary cooperation. On the other hand, the fact that the CFA franc appears to have achieved some stability since the implementation of reforms and pegging to the euro suggests that having an external anchor might help. In any case, this experience raises question as to the prospects for using an externally based peg to achieve financial cooperation among any group of African countries. © 2006 United Nations Economic Commission for Latin America and the Caribbean.