FEASIBILITY OF MONETARY UNION IN THE SADC AND THE EAC:ANALYSIS OF MACROECONOMIC CONVERGENCE CRITERIA

In August 2003, the Association of African Central Bank Governors announcedthat it would strive to establish a single currency and common central bank by2021. Many regional trading blocs and economic communities in Africa areworking towards this objective. For example, the Southern African DevelopmentCommunity (SADC) and the East African Community (EAC) are in the process ofintroducing monetary union in their respective regions which will be implementedin the near future. Such a decision is set to have wide-ranging economicramifications if a favourable economic environment does not exist on the ground.The purpose of this paper is to analyse and assess the progress towards monetaryunion in the SADC and EAC, using the macroeconomic convergence criteria ofthe two economic regions in the envisaged time frame. This study used annualdata, from 1995 to 2015, to analyse the economic feasibility of monetary union inthe two African economic regions. Descriptive statistical analysis was employedto assess the attainment of the macroeconomic convergence criteria. Based on thefinding, it is concluded that monetary union in both SADC and EAC is notfeasible, at least in the envisaged timeframe. There is lot to be done in a moreconsistent and convincing fashionfor a sustained period of time before theimplementation of monetary union