Biden picks up another high profile endorsement in Iowa as voting nears    Saudi wealth fund in talks to buy Newcastle United for £340 million: Report    Egypt allocates EGP 3 billion to develop road networks, alleviate poverty    China's President Xi holds politburo meeting on curbing virus outbreak    Coronavirus outbreak: Beijing to halt all inter-province shuttle buses from Jan 26    France confirms three cases of deadly China virus    Asian stocks quiet on Lunar New Year's eve after a turbulent week    Zamalek coach 'frustrated' after Champions League draw with TP Mazembe    Iraqi security forces raid Baghdad's main protest camp, shoot at demonstrators    Egypt's AOI, Canada's Point North Co signs deal to revamp SEMAF    Bodies of U.S. firefighters retrieved from Australian air crash site    EBRD, Egypt discuss developing country's water desalination sector    EIB to maximise support for clean energy investments    Egypt's economy one of region's fastest growing: el Saeed    Egypt doesn't need IMF financial support: Mission Chief    Egypt partakes in UNCCT's advisory board meeting    Argentine club makes throne for coach Diego Maradona    GEM at the forefront of Egyptian tourism promotion in 2020    Social Solidarity Ministry to review poverty database to ensure cash subsidies' eligibility    A year of major tourist openings ahead: Al-Anani    Two Iraqi protesters killed, 25 wounded in clashes with police: Sources    Kaspersky detects ‘data-leak compensation' scheme affecting Egypt, other countries    Despite FDA's anti-vaping campaign, popularity of e-cigarette grows    How many apps were downloaded in 2019?    Interdisciplinary study reveals new insights into evolution of sign language    Books not to miss this book fair - The dreams and agonies of an Egyptian filmmaker    Technical, legal committee meeting on GERD concludes in Khartoum    As Lebanese struggle to make ends meet, living costs set to soar higher    Financial solvency biggest challenge in Egypt's smart transport market    Egypt's Sisi marks National Police Day with visit to Police Academy    Audio recording: The voice of a 3,000-year-old Egyptian mummy    Egypt's achievements will be starting point for building modern state: El-Sisi    Al-Sisi reviews GERD negotiation updates ahead of Washington meeting    Apple's Safari web browser users are tracked despite prevention feature    Sesame Street launches Arabic TV programme for Middle East children dealing with displacement    US Congress delegation visits North Sinai: Armed Forces    Egypt in a group with Gabon, Libya, Angola in 2022 World Cup qualifiers    Egypt to play Angola for group leadership in African Men's Handball Championship quarter-finals    Al-Sisi orders additional social protection programmes for low-income: MP    Italy former honorary consul sentenced to 15 years jailtime for smuggling artefacts    Maspero triangle's towers will be up and standing in 30 months: NUCA    TMG to sponsor 5 Egyptian athletes qualified to Tokyo Olympics 2020    ‘Djamila Bouhired' movie star Magda al-Sabahi dies at 89    Egypt is best tourism destination for 2020 according to BBC    NBE studies establishment of rowing club in Cairo    Egypt's Zamalek, Smouha presidents hit with disciplinary sanctions by EFA    Egypt's President Sisi pardons some prisoners on 25 Jan. Revolution anniversary    Egypt's Sami Anan released after near two-year detention    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.





Why AMF is a good idea and what can be done to get it going?
In our view the AU leaders should also use their meeting to reinvigorate their efforts to create an African Monetary Fund (AMF).

The Conversation – African Union (AU) leaders will gather in Niger on July 7 for an Extraordinary Summit to discuss the African Continental Free Trade Area. They will be meeting at a critical moment for the continent as many African countries are experiencing uneven growth and rising debt, all face an uncertain global environment, and all need the boost that closer and more dynamic continental trade relations could deliver.
In our view the AU leaders should also use their meeting to reinvigorate their efforts to create an African Monetary Fund (AMF). This would be used to encourage African states to engage more actively in regional trade by offering them financial support for managing the risks associated with closer regional integration and expanded intra-regional trade.
Over the past 10 years, most regions have developed regional arrangements that can supplement the help that the IMF provides to countries facing balance of payments problems. Ten years ago, $100bn was available through these regional funds. Today more than $900bn is available through these arrangements.
Africa is currently the most prominent gap in the evolving global financial safety net.
African leaders signed a treaty to establish this fund in 2014. Unfortunately, progress to set it up has stalled.
So far, the treaty has been signed, but not ratified, by 11 AU member countries. A number of 15 must sign and ratify the statutes for the fund to become operational. Once operational, it will have a capital subscription of up to $22.64bn and the ability to provide member countries with loans equivalent to two times their contributions to the fund's capital.
Managing the ripple effects
The free trade area offers states new growth and employment opportunities. But by increasing economic linkages between African states, it could also increase the risk that economic problems in one country can spill over and have a strongly negative effect on growth, trade, investment, and employment in others.
For example, both positive and negative developments in the United States economy will have a powerful impact on Canada and Mexico.
To help mitigate these effects, participants in other regional trade arrangements have established regional financial arrangements. These provide financial support to their members to manage balance of payments crises.
The evidence suggests that when states have access to this type of financial support, they are less likely to take actions that impede intra-regional trade flows. For example, the Latin American Reserve Fund, which provides its members with financial support during balance of payments crises, has helped the recipient countries to maintain their intra-regional trade arrangements. This, in turn, has reduced the risk that the recipient's problems would cause a crisis in its neighbours.
The failure of an adequate number of states to sign and ratify the AMF treaty is an embarrassing challenge to the credibility of the AU's efforts to promote a more integrated, dynamic, sustainable, and equitable African economy. These efforts have been going on for more than 40 years.
Steps along the way have included the former Organisation of African Unity's Lagos Plan of Action for Economic Development of Africa signed in 1980 and the Abuja Treaty signed in 1991.
In a policy brief published by the Centre for Human Rights at the University of Pretoria and the Global Development Policy Center at Boston University, we propose three concrete steps to jumpstart the push for the fund.
Danny Bradlow
Action plan
First, the creation of the fund must be explicitly linked to the success of the free trade area. The AU leaders can do this by making the case that, just as has happened in other regions, the presence of a regional financial arrangement will support the efforts to boost intra-regional trade in Africa. It will help participating countries mitigate the balance of payments challenges that greater regional integration may cause.
Moreover, the fund, by quickly providing its members with financial support, can offer them more time to negotiate a larger support package with richer institutions, such as the IMF. In this regard, it should be noted that eight of the AU member countries (Cape Verde, Comoros, Djibouti, Eritrea, Guinea-Bissau, Sao Tome, and Principe, Seychelles, and Somalia) will be able to borrow more resources from the AMF than the International Monetary Fund (IMF).
Second, one AU member state should become the champion for the fund. This country would become the first country to sign and ratify the fund treaty. It would lobby other AU member countries to ratify the AMF. It would advocate for the AU to reconstitute the steering committee created in the treaty and provide it with adequate resources. Since Cameroon is the designated host country for the AMF's headquarters, it has an incentive to be a champion for the institution.
Hadiza Gagara Dagah
Finally, the steering committee should develop a plan for overcoming the substantial resource constraints in the region. This will require balancing the fund's need for sufficient resources to be credible with the limited ability of some states to contribute. This could be addressed by negotiating an arrangement in which richer regional countries and institutions contribute a disproportionate share of their capital contributions up-front.
These additional contributions will be reimbursed as poorer countries make their capital contributions. It's important to note that the AMF board of governors has the authority to extend the period for a country to make its contribution for up to eight years.
To further incentivise small to medium-sized member countries to contribute capital, they should be allowed to treat their capital contributions as part of their international reserves. Such an arrangement is not unprecedented and was used effectively in South America. These measures would make an implementation plan more feasible.
Africa has tried valiantly for decades to overcome the substantial challenges hindering the development of robust intra-regional trade. The free trade area agreement is the most recent of these efforts. The credibility of the continent's leaders and institutions will be influenced by its success or failure.
The establishment of the AMF would demonstrate the continent's determination to promote intra-regional trade and development.
Danny Bradlow is SARCHI Professor of International Development Law and African Economic Relations, University of Pretoria
William N Kring is an assistant Director, Global Development Policy Center, Boston University
Hadiza Gagara Dagah is a co-author of the policy brief, Jump-starting the African Monetary Fund, on which this article is based.


Clic here to read the story from its source.