0
0 News Ghana, Latest Updates and Breaking News of Ghana, News Ghana, https://newsghana.com.gh/african-union-advances-plan-for-single-currency-with-key-monetary-institute/
African Union (AU) member states have taken a decisive step toward deeper economic integration, endorsing a draft statute to establish the African Monetary Institute (AMI) – a pivotal body tasked with laying the groundwork for a continent-wide central bank and single currency.
The agreement, finalized during the AU Summit’s finance ministers’ meeting in Addis Ababa, signals renewed momentum for the bloc’s decades-old vision of financial unity amid persistent challenges like currency fragmentation and reliance on external aid.
Ghana’s President John Mahama, the AU’s appointed champion for financial institutions, announced the milestone at a high-level dialogue on financing Africa’s development agenda. “The AMI will spearhead technical, legal, and macroeconomic preparations critical for a seamless transition to a unified monetary system,” Mahama stated, framing the institute as the “architectural bedrock” for the future African Central Bank. The proposal now heads to AU heads of state for formal adoption.
The move aligns with the AU’s Agenda 2063, a blueprint for continental prosperity that hinges on integrating capital markets, harmonizing fiscal policies, and curbing Africa’s $100 billion annual infrastructure financing gap. Alongside the AMI, plans for the African Monetary Fund (AMF) and the African Investment Bank (AIB) aim to stabilize economies, fund cross-border projects, and reduce dependency on foreign loans. Meanwhile, the proposed Pan-African Stock Exchange seeks to merge the continent’s 29 fragmented stock markets, potentially unlocking trillions in domestic liquidity.
“A single currency isn’t just about simplifying trade—it’s about sovereignty,” Mahama argued, noting that exchange rate volatility and dollar dependency currently drain African economies. The ECOWAS bloc’s stalled eco currency rollout and the East African Shilling’s delays, however, underscore the political and technical hurdles ahead. Critics point to uneven fiscal discipline among states and competing national interests as potential roadblocks.
While the AMI’s endorsement marks progress, skepticism lingers. Africa’s previous attempts at monetary unions, like the Eco in West Africa, have floundered over disagreements about debt ceilings and monetary policies. The continent’s diverse economic landscapes—from oil-rich Nigeria to tourism-dependent Kenya—complicate consensus on inflation targets or interest rates.
Yet, proponents argue that the AMI’s phased approach, emphasizing gradual macroeconomic convergence, offers a pragmatic path. “This isn’t a rushed euro-style merger,” said economist Dr. Zainab Ahmed. “The AMI allows nations to align policies incrementally, learning from the EU’s missteps.”
The push also comes as African leaders seek alternatives to external financing. With global aid dwindling and debt crises looming in Ghana and Zambia, the AIB and AMF could provide lifelines for infrastructure and crisis response. However, questions remain about funding these institutions themselves. The African Development Bank estimates the AIB alone requires $10 billion in startup capital—a sum that may test member states’ resolve.
Mahama urged nations to fast-track domestic approvals for the AU financial framework, but implementation will demand tough reforms. Countries must meet strict convergence criteria, including capping budget deficits at 3% of GDP and inflation at 10%—a tall order for states like Zimbabwe (5.3% inflation in May) or Sudan (engulfed in conflict).
The Pan-African Stock Exchange faces its own hurdles. While integration could attract foreign investors, disparities in market regulation and transparency persist. Nigeria’s NGX and South Africa’s JSE, for instance, operate under vastly different disclosure rules.
Despite these challenges, the AMI’s endorsement reflects a growing appetite for self-reliance. As Mahama concluded, “The Africa we want—integrated, prosperous, resilient—is within reach if we muster the courage to invest in ourselves.” Whether that vision transcends rhetoric will depend on bridging the gulf between ambition and unity.
For now, the message from Addis Ababa is clear: Africa is inching closer to rewriting its economic destiny, one institution at a time.
News Ghana, Latest Updates and Breaking News of Ghana, News Ghana, https://newsghana.com.gh/african-union-advances-plan-for-single-currency-with-key-monetary-institute/
