Trade integration must precede monetary union - Mboweni

SOUTH AFRICAN Reserve Bank Governor, Tito Mboweni, said last week that important changes needed to take place in the structure of most African economies before true continental monetary integration became feasible. “You can’t in Africa just say we will cut prices in half – I am embarrassed by that,” said Mboweni. He said that if an analysis was done on the current state of convergence between African economies, the arrival point of a union was “more difficult than people talk about”. “When we move to a monetary union the challenges are much bigger than the niceties of brotherhood and sisterhood,” he emphasised. “Therefore I’m critical of a union without establishing criteria first,” he stated. Mboweni was speaking during Unisa’s International Banking Conference at Sun City. He pointed out that intracontinental trade was “very poor”. “So before we get to a monetary union and a common currency there are many practical things that need to be sorted out,” said Mboweni. Reforms he mentioned include increasing the forms of economic integration on the continent, especially trade integration. Tariff and non-tariff barriers between African countries also need to be addressed, he said. “We need to have a common understanding of statistics on the continent, like the CPI basket – what is the weight of everything in the basket,” added Mboweni. He concluded that a payment and clearing settlement system had already been developed in the region, a critical step in the integration process. Source: I-Net Bridge