The Governor of the Central Bank of Nigeria (CBN) Godwin Emefiele at the weekend emerged the president of the Association of African Central Banks (AACB) which held its 39th ordinary meeting of the Assembly of Governors in Abuja.
Emefiele who succeeds Governor of the Banque des stats de l’Afrique Centrale (BEAC), Lucas Nchama, will have the governor of the Bank of Ghana as chairman of the West African sub-region; governor of the Central Bank of Mauritania, chairman of the North African sub-region; and the governor of the Bank of Central African States, chairman of the central African sub-region working wi him during his tenure which runs from 2016 to 2017.
Also elected were the governor of Banque de la Republique du Burundi as chairman of East African sub-region and governor of the Central Bank of the Kingdom of Swaziland as chairman of the Southern African sub-region.
The Association of African Central Banks (AACB), which first met from February 15 to 22, 1965 in Addis Ababa, was one of the outcomes of the agreement of the 1963 Summit of African Heads of States and Governments in Addis Ababa, Ethiopia.
The association which has a membership of 40 central banks as at August 17, 2011, is aimed at promoting co-operation in the monetary, banking and financial spheres in the African region, assisting in the formulation of guidelines along which agreements among African countries in the monetary, banking and financial fields shall be reached as well as helping in strengthening all efforts aimed at bringing about and maintaining price stability and financial stability in the region.
The association was also formed to examine the effectiveness of international economic and financial institutions in which African countries have an interest and suggest ways of possible improvement and envisage, following a well-timed and sequenced convergence process, the advent of a single currency and a common central bank in Africa.
Currently, the Association is collaborating with the African Union in formulating and implementing the African Monetary Cooperation Programme (AMCP) as ground work for the establishment of the African Central Bank is ongoing. It is being carried out by the Steering Committee manned by experts from the African Union and the AACB.
The Steering Committee Secretariat is in Abuja, Nigeria. Two other monetary institutions agreed by the AU, the African Monetary Fund and the African Investment Bank, are also being set up in collaboration with the Association.
The objective of a common currency and central bank is expected to be discussed at the 2017 symposium which is themed “Prospects for monetary integration in Africa: Lessons Learned from the Experience of Momentary and Financial Integration of Europe” according to the communique issued at the end of the 2016 symposium held in Abuja with the theme “Unwinding Unconventional Monetary Policies: Implications for Monetary Policy and Financial Stability in Africa”.
The central bank governors deliberations at the end of the 2016 symposium showed that the unwinding of unconventional monetary policy measures, could have a negative impact on African countries due to the interconnectedness of economies.
In the comunique, the body noted that face challenges, especially the depreciation of the exchange rate and the decline in capital flows, which results from an exit from unconventional monetary policies in the developed countries.
“The unwinding of unconventional monetary policy could be an opportunity for African countries to develop appropriate measures to strengthen their resilience in the face of exogenous shocks.
“In this regard, the Assembly of Governors, stressed that it is necessary for African countries to diversify their economies and improve exports, while limiting imports. It also emphasised the urgent need for coordination between monetary and fiscal policy,” the communiqué read.
As the governors also examined the state of implementation of the African Monetary Cooperation Programme, they pointed out the inability of African states to sustainably meet some of the criteria for macroeconomic convergence.
According to the communique, this is because of the negative impact of the international environment, including the fall in prices of raw materials and commodities even as countries are urged to strengthen implementation of structural reforms, improve the business environment and promote intra-regional trade to strengthen their resilience in the face of external shocks.
Speaking at the opening of the meeting, Nigeria’s President Muhammadu Buhari had stated that while the region is confronted with several global and domestic economic challenges, the worrisome is the slowdown in growth; weakening global aggregate demand; rising inflation; capital flow reversals as a result of tapering in the United States; rising debt levels; increased exchange rate volatility and depleting external reserves due to dependence on primary commodity exports.
According to him, the region has suffered a sharp slowdown, owing to slump in commodity prices and softer global economic conditions, as natural resource producers such as Nigeria, Angola, South Africa, and Mozambique being the hardest hit.
He stressed the need for African central banks to “continue to look for original home grown solutions” and not rely on “fit for all purposes prescriptions handed down from abroad.” “The world is a dynamic place and with innovation, we can survive,” he added.
On his part, Emefiele noted that with the evolving of literature on the topic and the overwhelming consensus among experts that unwinding unconventional monetary policy could present challenges including that of financial instability, “it has become necessary for central banks to evolve appropriate coping strategies as a safeguard against any negative impact on financial stability.”