COMESA - Macroeconomic Policy Convergence

COMESA has adopted a number of treaties and protocols related to macroeconomic policy convergence to further benefit from deepened integration. In 1992, The Authority of Heads of State and Government adopted the COMESA Monetary Cooperation Programme towards the establishment of a Monetary Union in the year 2025. The date for the Achievement of the Monetary Union was later changed to 2018 by the COMESA Council of Ministers in 2006. The programme includes a number of stages leading to the establishment of the Monetary Union, namely, consolidation of existing instruments of monetary cooperation; introduction of limited currency convertibility and informal exchange rate union; formal exchange rate union and coordination of economic policies by a common monetary institution; and eventually realizing a full Monetary Union involving the use of one common currency issued by a common Central Bank. Thus, to achieve the Monetary Union, it was considered essential that the member States first undergo a process of monetary harmonization to attain macroeconomic convergence. In order to assess the implementation of the programme by member States, a number of convergence criteria were formulated, consistent with the African Monetary Cooperation Programme (AMCP). The COMESA Monetary Institute is managing the preparatory work for achieving the Monetary Union 2018 target.

COMESA created two Sub-Committees in order to enhance the implementation of the COMESA Monetary Integration Programme. The Monetary and Exchange Rates Policies Sub-Committee is responsible for devising appropriate monetary policy strategies and policy instruments while the Financial System Development and Stability Sub-Committee is responsible for developing strategies to diversify financial institutions and instruments in the region. The two Sub-Committees meet once a year to deliberate on their respective annual work plans. Moreover, the COMESA Convergence Council, comprising Ministries of Finance, Trade, Industry and Central Bank Governors was created by the 7th Summit of the COMESA Authority of Heads of State and Government in 2014 in Kinshasa, Democratic Republic of Congo in order to implement the COMESA Multilateral Macroeconomic Framework.

The COMESA Convergence Council is responsible for managing the implementation of the COMESA Multilateral Fiscal Surveillance Framework. However, to boost due to the slow implementation

The implementation of the programme, however, has been sluggish. To enhance the implementation of currency convertibility, member States were grouped into four clusters: Southern African subgroup; Northern African subgroup; Central and Eastern African subgroup; and Indian Ocean subgroup. Significant progress in implementation has been made in the Central and Eastern African subgroup in comparison to the others. The Northern African subgroup has, however, recently agreed on an action plan for the implementation of currency convertibility and has started quoting exchange rates of their neighbouring countries’ currencies in their forex Bureaus. Although implementation has been slow, progress is being made.[1]