Supporting regional integration
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In eastern and southern Africa, regional integration is being fostered by several subregional arrangements that have overlapping country membership. Among these are the Southern African Development Community (SADC), which is starting to phase in a free trade area set for 2008; the Common Market for Eastern and Southern Africa (COMESA), which established a free trade area between nine of its members in 2000 and plans a customs union in 2004; the Southern African Customs Union (SACU); and the East African Community (EAC), which is planning to implement a free trade area and common external tariff in 2004. Long-term objectives for both COMESA and EAC include a common currency and, for SADC, the formulation of guidelines for the convergence of macroeconomic policies and the promotion of economic stability.
The IMF is providing analytical support and advice to the secretariats of SADC and COMESA on trade and macroeconomic issues, as well as on financial sector modernization and reform,macroeconomic statistics, and the fiscal impact of trade reform. The IMF also supports the work of the Regional Integration Facilitation Forum (RIFF), particularly in its efforts to promote economic reform, coordinate the activities of the regional integration arrangements, and conduct peer-group surveillance of macroeconomic and associated policies in the region.
Integration efforts in West Africa are subdivided into two zones under the umbrella of the 27-year-old Economic Community ofWest African States (ECOWAS), which has 14 members. Its progress toward regional integration has lagged behind stated aims, however. In particular, the notional free trade zone is ineffective.
Eight ECOWAS members belong to a smaller regional grouping, the West African Economic and Monetary Union (WAEMU), within which the CFA franc is the common currency.WAEMU's CFA franc is issued by a common central bank, the Banque Centrale des Etats de l'Afrique de l'Ouest (BCEAO), and has been pegged to the French franc since 1948 and at the French franc/euro conversion rate since 1999. Of all the regional groupings in Africa,Page 3 WAEMU is the furthest along the path toward integration.
In addition to successfully maintaining their 52-year-old currency union,WAEMU members have implemented macroeconomic convergence criteria and an effective surveillance mechanism...
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