Assessing Regional Integration in Africa III: Towards Monetary and Financial Integration in Africa

African nations are vigorously pursuing an integration agenda in order to participate effectively in the globalization process. African leaders therefore view regional integration as a conduit for achieving sustainable economic growth and development and reducing the level of poverty plaguing the continent. In view of the slow pace of continent-wide integration, they have provided a framework for the implementation of the integration agenda. This framework is enshrined in what is known by integrationists around the continent as the Abuja Treaty, which calls for the creation of a continent-wide African Economic Community (AEC) and lays out six stages for the implementation of the integration agenda. Included in this framework is the creation of a monetary union for the continent. As the building blocks of the AEC, African regional economic communities (RECs) have or are in the process of establishing monetary unions. Monetary integration contributes significantly to deepening regional integration, especially for RECs aspiring to create common markets. The literature indicates that international trade and economic performance improve when a country enters into monetary cooperation arrangements such as monetary unions.