Namibia not ready for SADC uniform currency

21 January 2010, Informante
URL: http://www.informante.web.na/index.php?option=com_content&task=view&id=5636&Itemid=101

Windhoek:  The Southern African Development Community (SADC) is lagging behind in their quest to implement a single central bank and uniform currency between 2016 and 2018.  According to the Bank of Namibia (BoN), the SADC region has not covered enough ground in encouraging financial integration and trade links  among member states.

BoN public relations officer, Mauriza Fredericks, said a monetary union could only be successful if the regional trading bloc encourages stronger financial and political links among member states.
“From an economic point of view there are a number of preconditions that should be met for the currency union to work,” said Fredericks.

The idea of a single monetary institution and currency was mooted by regional leaders as a way of promoting fair trade and movement of goods and services in the region.  According to the BoN, SADC has not made any major strides towards achieving the  much talked about single currency.  While some SADC countries like Zimbabwe are already forecasting good economic fortunes if the single currency system is implemented, the Namibian monetary authorities think the idea might take longer than envisaged because the implementation of the single currency encompasses other external processes aside of the financial aspects.

BoN pointed out that geographical obstacles need to be taken into consideration before the idea becomes a reality.  However, the central bank, could not say whether Namibia will be ready to consider such a drastic monetary change referring the question to the Presidential Office or the Prime Minister’s office.  The central bank said they are not in a position to talk about the financial consequences that might come with the implementation of a single regional currency as the region’s organ responsible for financial issues has not made their model available to member states.
BoN also said the proposed regional single currency may be costly to member states including the loss of autonomy over monetary policy as well as the loss of flexibility in the use of fiscal policies.

The idea of the single currency was recently emphasised by the Zimbabwean Minister of Finance, Tendai Biti, who said the move would go a long way in  improving business links among member states.  However, BoN said the countries in the region could fail to achieve their specific economic objectives because the single currency system could see member states losing the monetary policies which are the key instruments of microeconomic management.  BoN also mentioned that most SADC countries are currently experiencing different stages of development with different degrees of financial structure which could be a hindrance to the success of a  monetary union in the region.

Commenting on the issue, Finance Minister Saara Kuugongelwa-Amadhila said Namibia has an obligation to fulfil by ensuring that the monetary union is a success because they are a signatory to the SADC community.  Kuugongelwa-Amadhila added that the region will be meeting this year to discuss progress that has been achieved so far on the issue which is viewed as the only way Africa can be able to withstand financial hardships.  “I agree it is very difficult to achieve what the region is aiming to achieve but as a region we must be ready to lose our sovereignty in the name of strengthening our financial status and promote trade and integration in the region,” she said.

She added that the countries in the region are not the first ones to target such an initiative as it has also been implemented successfully in the European Union.  Kuugongelwa-Amadhila said SADC will also have to make sure they have achieved a single customs union before the introducing the currency union.