THEME:PROMOTING KNOWLEDGE BASED ECONOMY THROUGH SUSTAINABLE DEVELOPMENT

1. Towards Macroeconomic Convergence and
Monetary Coordination: Challenges to Regional
Integration in Sub Saharan Africa
1st Maseno University Interdisciplinary Conference
30th June-1st July 2014, Maseno hotel, Kisumu
Okech, S.O., Ngigi, M.,
Basweti, E. and Okeyo,
B.O.

2. Introduction
Regional integration- Engines of sustainable
growth
Small nature of economies
High inflation
Instability of exchange rates
Financial fragility
The poor state of infrastructural services
Outcome: Non-achievement of UNDP’s –MDGs
Therefore, promoting macroeconomic integration
(Monetary Union) is urgent in Africa

3. Introduction cont’d
Africa: Present: 8 regional integrations
(EAC,SADC,ECCAS,ECOWAS,IGAD,UMA,CEN
-SAD,COMESA)–
Promoting economic cooperation,
Intra regional trade bargains (Market access)
Management of shared infrastructure among
members
These blocs are considered to have made some
real progress and are assumed to be on track to the
achievement of the 2025 target of Monetary Union

4. Introduction cont’n
With many ups and downs, a keen attention to
their position today in terms of monetary
convergence plan
Pre-requisite: Urgent shift in approach and
perceptions in overcoming the obstacles faced by
their mentors-European and American integrations

5. RESULT AND DISCUSSION:
TRADE LEVELS (2004-2014)
-10
0
10
20
30
40
50
60
70
80
1 2 3 4 5 6 7 8 9 10 11
Averagetradevolumes(ImportsandExports)
Year
Volume of intra-regional trade in EAC and SADC countries (Billions)
SADC Exports
SADC Imports
EAC Exports
EAC Imports

6. RESULT AND DISCUSSION:
UNDERLYING INFLATION (EAC-<5%)
Country 2000 2005 2007 2008 2009 2010 2011 2012 2013 2014
Uganda 4.5 8.6 6.07 12.04 13.07 3.97 18.68 14.02 5.44 6.28
Tanzania 6.2 4.36 7.03 10.28 12.14 7.19 12.69 16 7.87 5.23
Rwanda 3.9 9.12 9.08 15.44 10.35 2.31 5.67 6.29 4.22 4.07
Kenya 6.8 7.82 4.27 15.1 10.55 4.31 14.02 9.38 5.72 6.59
Burundi 24.3 1.2 14.42 25.97 4.62 4.09 14.89 11.99 8.84 5.95
Average 9.14 6.22 8.174 15.766 10.146 4.374 13.19 11.536 6.418 5.624

7. SADC: Inflation (Target: Single digit -2008)
SACU incl.
CMA 2001 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Botswana 6.6 8.61 11.55 7.08 12.623 8.12 6.95 8.46 7.53 5.76 3.8
Lesotho 6.9 3.44 6.08 8.01 10.716 7.38 3.60 4.99 6.18 5.31 4.66
Namibia 9.3 2.26 5.05 6.73 10.351 8.78 4.47 5.05 6.54 6.17 5.9
South Africa 5.7 3.39 4.69 7.09 11.536 7.13 4.27 5 5.65 5.75 5.98
Swaziland 7.5 1.75 5.2 8.08 12.657 7.45 4.509 6.12 8.94 5.62 5.52
Mauritius - 4.82 8.93 8.83 9.731 2.52 2.93 6.53 3.85 3.48 3.85
HIPCs
Congo D.R. 357.3 21.39 13.21 16.72 17.97 46.22 23.46 15.54 2.13 0.81 2.37
Malawi 27.2 15.41 13.90 7.96 8.71 8.43 7.41 7.63 21.27 27.71 15.11
Mozambique 9 6.43 13.25 8.16 10.33 3.26 12.70 10.35 2.09 4.21 5.6
Tanzania 5.2 4.34 7.25 7.028 10.28 12.14 7.19 12.69 16.00 7.87 5.23
Zambia 21.7 18.33 9.02 10.66 12.45 13.39 8.5 8.66 6.58 6.98 7
Madag. - 18.36 10.77 10.36 9.17 8.96 9.28 10.02 5.81 5.83 6.22
In crisis
Congo D.R. 357.3 21.39 13.21 16.71 17.96 46.22 23.46 15.54 2.13 0.81 2.37
Zimbabwe 76.7 -31.52 32.97
-
72.73 156.96 6.22 3.05 3.47 3.72 1.63 1.46
Angola
152.7
6.7 22.96 13.31 12.25 12.47 13.721 14.48 13.48 10.29 3.78 7.66

8. RESULT AND DISCUSSION:
CURRENT ACCOUNT DEFICIT (Excl.
grants)/ GDP ratio): Target: (-<5%)
EAC 2000
2005 2007 2008 2009 2010 2011 2012 2013 2014
Burundi -7.0
-4.91 -5.36 -0.98 1.72 -12.20 -13.62 -17.26 -23.22 -21.51
Kenya -3.4
-1.46 -3.95 -6.51 -5.51 -7.35 -11.16 -10.45 -8.31 -9.62
Rwanda -3.3
1.01 -2.23 -4.88 -7.29 -5.42 -7.24 -11.44 -7.31 -11.54
Tanzania -5.3
-6.63 -10.95 -10.23 -9.76 -9.30 -14.55 -15.86 -14.29 -13.93
Uganda -6.5
-2.52 -5.53 -8.71 -7.34 -11.07 -12.49 -10.47 -11.67 -12.56

9. CHALLENGES TO MU
Lack of monetary convergence criteria as a
target (UEMOA, CEMAC, ECOWAS, EAC and
SADC)
 Membership to several blocs with competing
and overlapping visions
Confused policies and tariff rules: importation
Lack of cost-benefit analysis criteria, low
political commitment and internal consultation
countries
Vulnerability to internal and external shocks
Slow trade and mobility of factors of
production

10. POLICY RECOMMENDATION
Prior internal consultations (public sector, private
sector and civil society)
Strengthening technical capacity and human
capacity for informative analysis
Creating of enabling institutional environment to
attract finances for integration – reduce
socioeconomic policy divergence
Clarity of integration treaties, leadership,
protocols and priorities
Creation of common clearing house and central
bank based on clear and realistic measurement
parameters

11. THANK YOU