Single currency mooted by 2016 JOY ORLEK AS DEADLINES for the integration of the 13-member Southern African Development Community (SADC) move closer, questions have been raised regarding the feasibility of the concept, particularly in the light of the European Union experience. The SADC agenda states that by 2008 all members must become part of the free trade area; by 2010 they must create a customs union; by 2015 a common market; and by 2016 a monetary union – in other words a single currency. A set of targets relating to issues like inflation rates and management of the budget has been put in place to ensure that these objectives are met. For example by 2008 all countries in the SADC must achieve a single digit inflation rate. Those that fail will be excluded from the process. In 2012 the target inflation rate is 5% and by 2018 3% or less. Similar targets have been put in place on issues like budget deficit before borrowing. But the wide disparities among the SADC countries create major challenges “You need a programme of macro economic convergence to bring them closer together,” Reserve Bank governor Tito Mboweni told guests at a Safmarine-sponsored business breakfast in Johannesburg last week. Statistics paint a clear picture of the challenges. Population variations range from 1.1m in Swaziland to 56.9m in the DRC while inflation rates for 2005 range from 3.8% in Mozambique compared to 144.4% in Zimbabwe. According to Mboweni, Central Banks are making progress in helping to advance the programme. “We have established a committee of Central Bank governors that meets twice a year while a working group meets regularly to look at issues like developing a monetary settlement database. “We are also developing a national payment and settlement system which is well advanced.” There are also good lessons to be learnt from the EU experience. The first, in Mboweni’s view, is ‘take your time’. “You also need to be strict about macro economic convergence criteria and write them into a binding legal agreement so that if anyone breaks the rules they can be taken to court,” he said. “Citizens must be informed at all the times to prevent the ‘no’ vote that was experienced in France and Holland, and finally, the biggest economy in the region must play the biggest role,” he said. “There’s nothing wrong in exercising your power.” Currencies, he believes, will have to converge on the SA rand and Botswana pula. “Already a number of SADC countries accept the rand as currency even though it is not legal tender.”
