One of the most exciting activities taking place under the Finance
and Investment Sector (FIS) is the co-operation initiatives of the SADC central banks.
Since the formation of the Committee of Central Bank Governors, a substantial amount of
progress has been made in areas related to central banking activities. Rosalind Mowatt
reports on some of the initiatives. Monetary integration in Europe resulted in the
establishment of the European Central Bank and the adoption of the common currency, the
Euro. Europe has taken many years to reach this point. SADC also hopes to reach such a
point one day; however at this stage, a common central bank and currency for the SADC
region are just distant dreams.
Indeed, southern Africa faces a very different set of economic problems and
circumstances. As a result, the Committee of Central Bank Governors, and in fact the FIS
as a whole, has started off by focusing on areas of practical co-operation, such as the
sharing of information and expertise.
With the increasing emphasis being placed on the financial sector in the global
economy, it is imperative that the SADC economies meet international expectations as far
as possible in such areas as payment, clearing and settlement systems, banking
supervision, and monetary policy.
The Committee of Central Bank Governors meets on a biannual basis to discuss ongoing
projects and initiatives, as well as other issues of mutual interest. There are various
sub-committees and steering committees under the Committee of Governors, as well as a
working group which meets on a regular basis to discuss the progress of projects and to
set the agenda for the governors meeting. There is also a small secretariat situated at
the South African Reserve Bank (SARB), which performs a full-time co-ordinating function
for the committee.
It is important to note that sub-committees and other
substructures of the committee have no authoritative power over the governors and cannot
force them to follow a particular path. However, they do exert some influence in the form
of moral suasion – there will be pressure to take part in the various initiatives
because governors will want to avoid seeming uncommitted to SADC. In fact, the SADC
structure may also ease some of the pain of taking politically unpopular but economically
sound decisions – the “blame” can often be shifted away from the national
government and onto SADC! |
On the advice of the SADC
Governors’ Information Technology (IT) Forum, the SADC FIS established a statistical
database. The database is regularly updated and posted on the Internet on a biannual
basis. The IT Forum is driven by a co-ordinating team consisting of representatives from
the central banks in South Africa, Mauritius and Mozambique. It has also managed to
facilitate the connection of all SADC central banks to the Internet and e-mail, and has
created an interactive web page, which serves as a working area for project teams. Work
has commenced on developing a common application architecture for SADC central banks,
meaning that all central banks will be using the same application programmes (or software)
to perform various functions. In the long run, this initiative will facilitate regional
central bank integration, as well as ensuring region-wide adherence to similar high system
standards.
A SADC Payments Systems Project has also been initiated. It is the objective of the
Payments Systems Project to assist the individual SADC countries in developing their own
strategies to facilitate cross-border payments (both regionally and internationally), as
well as to come up with a co-ordinated regional plan regarding the latter.
The Sub-committee on Exchange Controls was created in 1997. It is tasked with compiling
a report for the Committee of Governors on an annual basis, comparing the degree of
exchange control liberalisation in each of the SADC economies and making recommendations
for further liberalisation.
The central banks are co-operating in the area of training for central bank officials.
Training courses involving all SADC central banks are currently being held in South
Africa. A Training and Development Forum was also approved by the Committee recently, as a
vehicle for the co-ordination of training within the SADC central banks.
A recent initiative, begun with a workshop in August last year, is
a steering committee on the legal and operational frameworks of central banks. The
committee is composed of economic and legal experts from the central banks of Malawi,
South Africa, Swaziland, Tanzania, Zambia and Zimbabwe. The objectives of this project are
to summarise the legal and operational structures and frameworks of all SADC central
banks, analyse the present differences in these structures, and propose possible steps to
reach greater comparability and concurrence between central banks in the region. |
Under the auspices of the
Committee of Governors, a study is being undertaken by the Economics Department of SARB on
the development and operations of money markets in the SADC region. A money market is a
market for the issue and trading of short-term securities, both public and private. In
many SADC countries, money markets are undeveloped, as are the interbank or secondary
markets. The study will focus particularly on the role central banks can play in the
enhancement of these markets. The most recent initiative of the Committee of Central
Bank Governors is co-operation between protective services staff in the various central
banks. They are looking at issues such as information security, cash in transit, and
access control in central bank environment.
The economies of southern Africa still face many daunting challenges. A greater level
of regional integration can assist in meeting such challenges, but obstacles to
integration itself are also high. The diverse nature of SADC economies (different sizes,
legislation, arrangements and structures), as well as political tensions and instability
in the region are two factors that pose a threat to further positive integration.
However, it is hoped that the efforts of the central banks in the region may facilitate
a greater level of integration in the financial sector, as well as help to promote a sound
financial infrastructure in all SADC countries. The tremendous level of commitment to and
enthusiasm for the committee, and the large amount of time and resources which central
banks thus far have devoted to its aims, augur well for the future.
Rosalind Mowatt is an economist at the SADC Finance and Investment Sector
coordinated by South Africa. She is also editor of the Finance and Investment Sector
Newsletter.
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