The African Union is convening a consultative forum to assess the implementation of the African Union Financial Institutions (AUFIs) in Zambia’s capital, next week.
The meeting on Dec 13-15 Will bring daughters Ministries of Finance, Central Banks, AU Organs and specialized Agencies, regional Economic blocs, African Central Banks and Securities Exchanges associations, among others.
The participants will look into the economic and political challenges impeding the Member States’ ability to sign and ratify legal instruments establishing the financial institutions.
They will also tackle “constraints that restrain the continent to collectively pool their sovereignty to mutualize their efforts and resources” for the establishment of the AUFIs, the African Union said today.
The forum is expected to formulate a strategy to generate consensus and political will on key issues in a bid to galvanize the momentum toward the establishment of the AUFIs.
The meeting will be held amid the dynamics in the global economic and financial structures present challenges. threatening macroeconomic stability, economic growth, and sustainable development in Africa.
The continent has taken on various economic and political integration initiatives, such as trade promotion, acceleration of inclusive growth and sustainable development to minimize the impact of the resulting instability.
While trade integration has received significant attention and made great strides over the years, financial integration has progressed slowly.
In 2009 and 2014, the legal instruments for the establishment of the African Investment Bank (AIB) and the African Monetary Fund (AMF) were adopted, respectively.
However, none of the financial institutions has reached the requisite number of ratifications to enter into force.
The AU pointed out that inadequate funding for establishing the Institutions has been detrimental to the operationalization of the African Monetary Institutes, which is the first step toward the establishment of the African Central Bank (ACB).
The urgency to expedite the establishment of the AUFIs has been underscored by the changing global economic landscape due to the COVID-19 pandemic, climate change and insecurity which also calls for the revision of the legal instruments establishing the Financial Institutions, the bloc says.
Progress on the establishment of AUFIs
Although challenges exist, there has been notable progress in the establishment of the AU Financial Institutions.
Some of the notable progress include.
- In February 2020, the African Union appointed Nana Addo Dankwa Akufo-Addo, President of Ghana, as the Champion of the AU Financial Institutions. The Champion provides political leadership and awareness to accelerate AU Financial Institutions.
- In February 2022, the Assembly of Heads of State and Government adopted the macroeconomic convergence criteria of the African Monetary Cooperation Program and mandated the AU Commission and the Association of African Central Banks (AACB) to monitor the implementation of the macroeconomic convergence criteria and report annually. In August 2023, the Assembly of Governors requested the AU Commission and AACB Secretariat to activate the Peer Review Mechanism for monitoring the implementation of the macroeconomic convergence. As such, the Secretariat was formed in October 2023 to oversee this work.
- The 6th Specialized Technical Committee (STC) on Finance, Monetary Affairs, Economic Planning and Integration held in July 2023 recommended to the AU Commission to submit the revised statute of the African Monetary Institute to the AACB Assembly of Governors for consideration and endorsement. Following the Governor’s endorsement, the document has since been transmitted for the consideration and endorsement of the policy organs of the African Union.
- Launch of the Africa Exchanges Linkage Project (AELP). The African Union Commission and the African Securities Exchanges Association (ASEA) signed the Memorandum of Understanding (MoU) in July 2022. The collaboration aims to scale up the AELP and transform it into a Pan African Stock Exchange (PASE). The AELP was launched in November 2022. So far, there are nine (9) participating Securities Exchanges: The African Union Commission will play an active and central role in encouraging more countries to participate in the AELP, a path towards establishing PASE.
”The progress made however remains insufficient to establish the AU Financial Institutions within the required timeframe,” the AU says, encouraging Member States “to take ownership and extend the political will to accelerate the implementation process.:
The establishment of African Union Financial Institutions can contribute significantly to the economic development, stability, and prosperity of the continent.
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