COMESA has a programme of monetary cooperation which will culminate in Monetary Union. The mandate to set up a Monetary Union in COMESA is derived from Article 4 (4) of the COMESA Treaty signed in Kampala, Uganda on 5th November, 1993, which states that the COMESA Member States shall “in the field of monetary affairs and finance, co-operate in monetary and financial matters and gradually establish convertibility of their currencies and a payments union as a basis for the eventual establishment of a monetary union”. This mandate is further reinforced in Articles 76-78 which respectively deal with the: COMESA Monetary and Fiscal Policy Harmonization (MFHP), establishment of currency convertibility and formation of an exchange rate union.
The COMESA Committee of Governors of Central Banks set up a COMESA Monetary Institute which became operational in March, 2011, in order to undertake all activities related with making the region zone of macroeconomic stability and to ultimately achieve monetary union.
Decisions of the COMESA Committee of Governors of Central Banks on the Establishment of CMI
The Thirteenth Meeting of the COMESA Committee of Governors of Central Banks which was held in Cairo in 2008, after reviewing the studies undertaken on the establishment of CMI decided the following:
(i) CMI should at the initial stage focus on macroeconomic surveillance, research and compilation of statistics and be headed by a Director;
(ii) The staffing should be composed of two senior economists, one economist and one statistician to be recruited from COMESA Central Banks;
(iii) The locally recruited support staff should comprise of a secretary, a driver and a receptionist;
(iv) Administration and finance services and information and communication technology to be initially provided by the host Central Bank;
(v) The initial cost in the first year of operations to be approximately US$926,510 to be equally shared amongst all COMESA Central Banks (amounting toUS$48,764 per Central Bank);
(vi) The Institute to be operational on 1st January 2011; and
(vii) Preliminary contacts be made with cooperating partners with the view to part funding of CMI.
(viii) Venue for hosting the Institute be chosen.
(ix) Charter and Host Agreement of the Institute to be prepared
The specific policy oriented activities of the CMI, as decided by the COMESA Committee of Governors of Central Banks, are as follows:
- Design of an appropriate Monetary Policy Framework;
- Design of an appropriate Exchange Rate Mechanism (ERM);
- Follow up on the Implementation of the COMESA Financial Development and Stability Plan;
- Follow up on the implementation of the COMESA Assessment Framework for Financial System Stability by Member Countries;
- Harmonisation of Concepts, Methodologies and Statistical Frameworks;
- Undertake sensitisation Programmes
- Follow up on the implementation of the COMESA Multilateral Fiscal Surveillance Framework;
- Paving the ground for the setting up of the COMESA Central Bank;
- Provide Technical Assistance and Capacity Building support to National Central Banks.