Conclusion: Currency Regimes and Monetary Integration in Africa, the Way Forward

Abstract

The chapter examines the steps that African Countries are taking towards monetary integration at sub-regional and continental levels. The aim is to have a single continental currency—the newly launched African Continental Free Trade Area (AfCFTA) is a precursor of the African Monetary Union. The AfCFTA became operational in January 2021 and, with a combined GDP of $3.4 trillion, is projected to be the largest free trade area in the world if implemented fully. The AfCFTA requires countries to reduce trade and non-trade barriers to allow for the free movement of goods, people with rights to live, establish and invest in any part of the continent.

Furthermore, the chapter demonstrates clear prospects and conditions for successfully building the African Monetary Union since monetary policy affects economic growth directly and indirectly through the transmission mechanism of credit to the private sector that promotes economic growth. At the same time, the key to the success of the proposed African single currency is to work towards the convergence criteria, including political and macroeconomic stability, but more importantly, having a prudent and responsible macroeconomic policy with a robust policy of credit access expansion.