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Central Banking in Sub-Saharan Africa: Introduction and Overview

Central Banking in Sub-Saharan Africa: Introduction and Overview African central banks have covered an extraordinary distance since the early 1990s—closing the gap, in the process, between their own policy challenges and those of richer-country central banks. Some striking differences are nonetheless easily missed, amid the many parallels between central banking reforms in Sub-Saharan Africa (SSA) and those in the industrial and emerging-market economies. The abandonment of soft pegs in low-income SSA, for example, had less to do with capital mobility than with the failures of exchange control systems under pressure from fiscal imbalances and external shocks. Fiscal and quasi-fiscal demands, in turn, have almost certainly been more important than conventional stabilisation objectives as potential sources of inflation bias in SSA. Money-based disinflation programmes, to take a final example—often supported by tight fiscal rules under IMF conditionality—do not appear to have involved costly sacrifices of output, outside of South Africa.  These observations, and more in the papers collected here, suggest that the distinctive structural and institutional features of low-income countries may have distinctive implications for the design and conduct of monetary policy. Collectively, the papers in this volume issue a compelling call for monetary policy research that focuses squarely on the economic environment of low-income Africa. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of African Economies Oxford University Press

Central Banking in Sub-Saharan Africa: Introduction and Overview

Ajakaiye, Olu; O'Connell, Stephen A.
Journal of African Economies , Volume 20 (suppl_2) – May 1, 2011
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Publisher
Oxford University Press
Copyright
© The author 2011. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: journals.permissions@oup.com
Subject
Articles
ISSN
0963-8024
eISSN
1464-3723
DOI
10.1093/jae/ejr004
Publisher site
See Article on Publisher Site

Abstract

African central banks have covered an extraordinary distance since the early 1990s—closing the gap, in the process, between their own policy challenges and those of richer-country central banks. Some striking differences are nonetheless easily missed, amid the many parallels between central banking reforms in Sub-Saharan Africa (SSA) and those in the industrial and emerging-market economies. The abandonment of soft pegs in low-income SSA, for example, had less to do with capital mobility than with the failures of exchange control systems under pressure from fiscal imbalances and external shocks. Fiscal and quasi-fiscal demands, in turn, have almost certainly been more important than conventional stabilisation objectives as potential sources of inflation bias in SSA. Money-based disinflation programmes, to take a final example—often supported by tight fiscal rules under IMF conditionality—do not appear to have involved costly sacrifices of output, outside of South Africa.  These observations, and more in the papers collected here, suggest that the distinctive structural and institutional features of low-income countries may have distinctive implications for the design and conduct of monetary policy. Collectively, the papers in this volume issue a compelling call for monetary policy research that focuses squarely on the economic environment of low-income Africa.

Journal

Journal of African Economies – Oxford University Press

Published: May 1, 2011

Keywords: JEL classification E58

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