The Constitutive Act of the AU mandates the creation of 3 key financial institutions namely the African Central Bank (ACB), the African Monetary Fund (AMF) and the African Investment Bank (AIB). The establishment of the African Financial Institutions is a flagship programme of Agenda 2063 and these institutions are seen as key in accelerating the continent’s regional integration and socio-economic development as they will play a focal role in the mobilisation of resources and management of financial sector. The role of these institutions is to implement the economic integration called for in the 1991 Treaty Establishing the African Economic Community (Abuja Treaty)
The AU Assembly has adopted Protocols for the Establishment of the AMF and the AIB. The draft strategy for the Establishment of the ACB is awaiting submission to the Assembly. The proposed structures will be submitted to the Executive Council for approval, once the legal instrument for each institution comes into force.
The African Monetary Fund (AMF)
The purpose of the AMF will be to facilitate the integration of African economies by eliminating trade restrictions and providing greater monetary integration, as envisaged under articles 6 and 44 of the Abuja Treaty. The Fund is expected to serve as a pool for central bank reserves and AU Member States’ national currencies. The Fund will prioritise regional macro-economic objectives in its lending policies.
The AMF objectives include:
- Providing financial assistance to AU Member States
- Acting as a clearing house as well as undertaking macro-economic surveillance within the continent
- Coordinating the monetary policies of Member States and promoting cooperation between their monetary authorities
- Encouraging capital movements between Member States.
The AU Assembly adopted the AMF Protocol and Statute at its June 2014 Summit (Assembly/AU/Dec.517(XXIII)). The Protocol and Statute will enter into force 30 days after ratification by 15 Member States.
As of August 2017, 9 Member States had signed the Protocol and none had ratified it (see https://au.int/treaties). The agreed timeframe under Agenda 2063 for establishing the AMF is 2023. The AMF Headquarters will be in Yaoundé, Cameroon (EX.CL/Dec.329(X)).
The African Investment Bank (AIB)
- The purpose of the AIB will be to foster economic growth and accelerate economic integration in Africa. The AIB’s objectives will be to:
- Promote public and private sector investment activities intended to advance AU Member State regional integration
- Utilise available resources for the implementation of investment projects contributing to strengthening of the private sector and modernisation of rural sector activities and infrastructures
- Mobilise resources from capital markets inside and outside Africa for the financing of investment projects in African countries
- Provide technical assistance as may be needed in African countries for the study, preparation, financing and execution of investment projects.
The AU Assembly adopted the African Investment Bank Statute at its July 2009 Summit (Assembly/AU/ Dec.251(XIII)). The AIB Protocol and Statute will enter into force 30 days after ratification by 15 Member States. As of August 2017, 22 Member States had signed and 5 had ratified the AIB Protocol namely Benin, Burkina Faso, Congo, Libya, and Togo) (see https://au.int/treaties). The agreed timeframe under Agenda 2063 for establishing the AIB is 2025. The AIB will be located in Libya (see Assembly/AU/Dec.64(IV)).
The African Central Bank (ACB)
The purpose of the ACB will be to build a common monetary policy and single African currency as a way to accelerate economic integration. The ACB’s objectives will be to:
- Create and manage the continental common currency
- Promote international monetary cooperation through a permanent institution
- Promote exchange rate stability and avoid competitive exchange rates depreciation
- Assist in the establishment of a multilateral system of payments in respect of current transactions between members states and eliminate foreign exchange restrictions that hamper the growth of world trade.
The establishment of the ACB will be based on the Joint African Union Commission/ Association of African Central Banks (AACB) Strategy, which was adopted by the AACB in August 2015. The agreed timeframe under Agenda 2063 for establishing the ACB is between 2028 and 2034. Preparations for the ACB will be made through the African Monetary Institute, which is expected to be established before the ACB. It is proposed that the ACB Headquarters will be in Abuja, Nigeria.