Feasibility of monetary Union in the SADC and EAC: analysis of macroeconomic convergence criteria
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In August 2003, the Association of African Central Bank Governors announced that it would strive to establish a single currency and common central bank by 2021. Many regional trading blocs and economic communities in Africa are working towards this objective. For example, the Southern African Development Community (SADC) and the East African Community (EAC) are in the process of introducing monetary union in their respective regions which will be implemented in the near future. Such a decision is set to have wide-ranging economic ramifications if a favourable economic environment does not exist on the ground. The purpose of this paper is to analyse and assess the progress towards monetary union in the SADC and EAC, using the macroeconomic convergence criteria of the two economic regions in the envisaged time frame. This study used annual data, from 1995 to 2015, to analyse the economic feasibility of monetary union in the two African economic regions. Descriptive statistical analysis was employed to assess the attainment of the macroeconomic convergence criteria. Based on the finding, it is concluded that monetary union in both SADC and EAC is not feasible, at least in the envisaged timeframe. There is lot to be done in a more consistent and convincing fashion for a sustained period of time before the implementation of monetary union.