The African continent is not yet ready for convergence as it has a lot of issues that still have to be ironed out, the Reserve Bank of Zimbabwe governor Gideon Gono said last week.
Gono told bankers and senior company executives at a meeting last week central bank governors recently held a meeting where it was agreed that convergence could be possible by 2020.
“We have recently sAt down and said it will not be possible until probably 2018 to 2020 because there is a lot of work that still needs to be done. At the African Union level they had already gone ahead and set up a central bank for Africa without us in the Sadc region participating with our views on that,” said Gono.
“The bank was to be headquartered in Libya and another institution linked to it stationed in Nigeria. As central bank governors in the region we said ‘Forget it, we would like to be part of the institution and also need to have a say’.”
Heads of State and government leaders from the Common Market of Eastern and Southern Africa (Comesa), the East African Community (EAC), and the Southern African Development Community (Sadc) signed a declaration launching the negotiations for the establishment of the Comesa-EAC-Sadc Tripartite Free Trade Area last month Gono said there was still need for political agreement on the continent adding that it took the European Union over 10 years yet they were still having difficulties, with other countries regretting.
“We have other members who are part of Sadc and Comesa which is doing its own thing. So we have got a lot of reconciliation to be done.
“Whose currency is going to be used? Is it the Zimbabwe dollar? Are we going to use the rand? Are we going to use the meticals. Whose face are we going to put on the currency?” said Gono.
London-based Oversees Institute Development economist Yurendra Basnett said political stability and leadership were imperative for such projects.
“We just saw how important political leadership is with the issue of Greek debt crisis. I think regional integration is not just about political stability within countries, but also developing shared visions that need constant support from political leaders as well as from people that live within the regional economic communities,” said Basnett.
“Cultural differences, in my opinion, are factors that can be both positive/supportive and a barrier — it depends how people choose to leverage cultural diversity.
Basnett said chances for an African Grand Free Trade area to become reality in a few years will depend on how sub-regional economic integration such as East African Common Market, Sadc and Ecowas work as there were multiple overlapping memberships in these, which at times contradicted each other.
“Trade within Africa is quite limited at present. In other words, Cairo and Cape Town trade more outside of Africa than between each other. So, we need to increase the volume of trade (goods and services) within Africa. Third, physical connectivity needs to be addressed.
There is quite a lot of work already, such as the trade corridors that are reducing the time it takes to transport goods.
Basnett said regional economic cooperation on the continent was not a new phenomenon, adding that the Southern African Customs Union is one of the oldest in the world.
She said integration free trade agreements were important, but should be founded on increasing and improving physical connectivity amongst other important complimentary issues. Brussels-based, BusinessEurope advisor Anka Schild said regional integration enabled companies to expand and to do business across borders with more ease.
“In my view, regional integration is always a work in process, whether in Europe, in Africa, or in the recently established Customs Union of Russia with Belarus and Kazahstan,” she said.