By Enyichukwu Enemanna
South African Reserve Bank Governor, Lesetja Kganyago, says it is unnecessary to float a common currency for countries on the African continent and swiftly added that it is a “political project” that may never happen.
Kganyago during a wide-ranging interview with Metro FM radio on Tuesday reeled out a number of issues, including differences in fiscal policies and banking rules that may make the project impossible.
“What do you need to have an African currency? You need to have macroeconomic convergence,” Kganyago stated during the interview.
In his opinion, for this to happen, it implies bringing inflation and debt levels among nations on the continent at similar levels, as well as consistent fiscal policies and banking rules.
“Absent those, it’s impossible,” he said during an event hosted at the Soweto Theatre in southern Johannesburg.
The BRICS group of nations, which South Africa is considering feasibility of introducing a common currency in response to the fallout from higher interest rates in the US, as well as the use of the dollar as a sanctions instrument by Washington.
The BRICS group comprises Brazil, Russia, India, China and South Africa.
“If the BRICS political leaders say that is where they are going, us as technocrats, all we can say to them is, if you want it, you’ll have to get a banking union, you’ll have to get a fiscal union, you’ve got to get macro-economic convergence,” Kganyago said.
He added, “And importantly, you need a disciplining mechanism for countries that fall out of line with it. And the euro project demonstrated just that.”
