The Process of Monetary Integration in the SADC Region

The African Union has agreed, in principle, to implement monetary union and a single currency in Africa by 2021. This would be based upon the prrior formation of regional monetary union, including one in the SADC region. This article considers the economic prerequisites and implications for a monetary union and, in the light of this, whether a SADC monetary union is feasible. After reviewing the existing monetary union within SADC (the rand-based Common Monetary Area) and current SADC macoreconomic convergence initiatives, the article examines the extent to which key economic and monetary variables - inflation, interest erates and exchange rates - are converging within SADC. It concludes that there is a core 'convergence' group comprising the CMA countries - South Africa, Lesotho, Namibia and Swaziliand - plus Botswana, Mauritius, Mozambique and Tanzania whose macroeconomic performance satisfies some of the criteria for monetary union. The remaining SADC countries - Angola, DRC, Malawi, Zambia and Zimbabwe - make up a 'non-converging' group that cannot not be considered potential candidates for monetary union. However, even in the concergence group, countries remain far from satisfaying the other prerequisites for monetary union, including significant intra-regional trade, and full capital abd labour mobility. There are also major political constraints, making the AU monetary union proposals an timetable highly ambitions.