AFRICANGLOBE – When the Constitutive Act of the African Union was written to implement the Sirte Declaration, there were three financial institutions that were established to facilitate inter-African trade.
These were: the African Investment Bank (AIB), the African Monetary Fund (AMF) and the African Central Bank (ACB). It was agreed that it would be necessary to establish a single common currency in Africa in order to speed economic integration.
The planning for the African Monetary Fund and for the African Central Bank was supposed to be a phased process alongside the process of the full unification of Africa, leading towards the Union Government of Africa.
When the Constitutive Act was written, there was no sense among the leaders of Africa that the capitalist crisis would bring down governments in Europe, spawn a Eurozone crisis along with the current currency war that is being waged against the poorer nations.
Since the start of 2014 the world has witnessed a new battle ground as currency speculators put the reserves of poorer countries under pressure. The attacks on the currencies of societies such as Argentina, Brazil, Indonesia, South Africa, Turkey, India, and others have reached the front pages of international news beyond the financial pages.
What is clear is the predators on Wall Street are now attacking the currencies of the exploited world and nations with the smallest reserves have to dig into their reserves to fend off currency speculators as we are continuing to see the exchange rates of Africa under pressure.
What is less clear in many countries in Africa and other parts of the Developing World, though, is the ways in which this currency war is inextricably linked to the volatility of Wall Street. Neo-liberal interpretations of the world allow policymakers to promote prescriptions that exacerbate capital flight from Africa. The belief in markets is one myth that has suborned technicians in Africa to continue to support the political and military power of the USA. The assertion that the United States has a comparative advantage as an originator of high value quality financial assets can now be dismissed as the justification for supporting the military power of the USA.
It is within this context that it is urgent that Africa begins to work toward a single currency.
One of the prior steps would be to establish the African Currency unit with strict benchmarks for the integration of Africa towards the adoption of a single currency.
Without the establishment of the African Central Bank that functions under democratic control, and a credible African currency the drain of resources will continue. The amount of documented evidence is well known. Research from the African Development Bank (AfDB) revealed in May 2013 that in the three decades from 1980 to 2009, African countries lost up to $1.4trillion in illicit financial flows, known as capital flight. These figures from the African Development Bank are repeating the scholarly findings of James K. Boyce and Léonce Ndikumana that has been around for about twenty years.
One of the most urgent political matters for the progressive forces is to end the capital flight from Africa and the seizure of African resources for external forces in alliance with African militarists. Capital flight from Africa ensures that there are no resources for infrastructure, for social development and programs and to provide for the needs of the majority of the African peoples.
Progressives and those working for the full unification of Africa should be promoting the process of establishing a common currency in Africa so that Africans no longer keep their foreign currency reserves in the US dollar, Euro or the pound sterling.
Africans can learn a lot from what is being done in the ASEAN societies where the first step of monetary integration has been placed on the table in the form of the Chiang Mai Initiative. This Initiative has laid the basis for a number of ventures such as bilateral swaps to protect the societies of East Asia from the Wall Street foreign exchange traders and to enhance regional trade. The planning for the Asian Currency Unit is following the lines of creating a firewall in Asia to protect the societies from the currency wars being waged by currency traders.
Within Asean states bilateral pacts to swap and repurchase central-bank reserves have prevented the kind of raiding that went on at the time of the Asian financial crisis 1997-1998. These societies in Asia do not agree politically and have many differences but they are all agreed to establish various initiatives to ensure that their societies are not bullied by the IMF or the World Bank. Moreover, they have learnt the harsh lessons from 1997 when George Soros and other derivative traders undermined their currencies.
The establishment of the Asian Monetary Fund and the Asian Bond Fund have been supported to escape the surveillance and strictures of the International Monetary Fund. Thus, the Asian Bond Market, the Asian Monetary Fund and the Chiang Mai Initiative are all steps on the road towards the single currency in Asia. In order to seal this pathway, they have now launched the Regional Comprehensive Economic Partnership (RCEP) which is to be concluded by 2015.
In short, the citizens of Asia are now waiting for the collapse of the dollar to disengage from the International Monetary Fund and the raiding of currencies by Wall Street Traders.
Despite the clear planning for Free Trade Areas in Asia, the levels of integration in Africa at the level of the people are in many ways more advanced than Asia.
Traders in differing parts of Africa, especially women traders from West Africa, have demonstrated a certain ease in traversing the continent and doing business. The customs and immigration laws across Africa continue to hinder the free flow of goods, services and people. International capital and international capitalist can move freely across the lines drawn in Africa as borders, but the so called leaders continue to try to enforce laws that prevent the freedom of movement while they and their family illicitly export needed reserves from Africa.
The majority of African governments keep their reserves in dollars. Their membership of the IMF dictates the terms of their financial engagement with the international capitalist system. The US devalues the dollar by printing US$65 billion every month. Africans are losing in a number of ways but two are most blatant.
First, many African states keep their reserves in dollars and these are devalued under the Quantitative Easing of the USA dollar which permits the Federal Reserve of the USA to simply offload dollars on the world. In the past three years the US government has been printing over a trillion dollars every year.
Second, foreign exchange reserves have to be used as a shock absorber during times of volatility when Central Banks have to use their reserves to buffer their currencies against sharp decline by buying even more US dollars to support their currency. Another hidden side of the super exploitation of Africa emerges in the form of those central banks that are hedging against the dollar. Many of the oil producing states of the Middle East are hoarding gold because of the currency wars and the devaluation of the dollar.
These societies support front persons in Africa that abet the flow of gold and diamonds out of Africa.
By: Horace Campbell