The African Union (AU) Summit has approved the creation of an African Monetary Fund (AMF), with an initial capital of US$22.64 billion, to promote economic development in Africa. The Fund will work to correct balances of payment positions across Africa, mainly caused by low export of commodities and high import volumes which have exerted a negative burden on currency stability. African Union Commissioner for Economic Affairs Anthony Maruping said the AMF was being established to help tackle macro-economic matters in Africa.
"It is not true that there has been an economic leadership gap in Africa," Maruping told PANA. "We are creating an African institution because the UN Economic Commission for Africa is a global body."
The Fund is expected to create a proper lending system in Africa to correct the balance of payment imbalances within the continent and ensure exchange rate stability.
It will also work towards African currency convertibility, ensuring that currencies across Africa can be exchangeable.
The Fund will promote monetary cooperation to achieve Africa's desires to achieve economic integration, and will also try to speed up economic development within Africa.
To achieve this objective, the Fund will design formulas to lower the debt burden and other debt management policies in Africa and also facilitate the development of the African financial markets.
Its authorised share capital is denominated in 100 dollars per share. The callable share capital of the Fund has been set at 50% of the authorised share capital, which is US$11.32.
The paid up share capital would be at least 50% of the callable share capital - US$5.66 billion denominated in 100 dollars.
South Africa is expected to get the highest allocation of the 500,000 shares, with an 8.05% share, translating into nearly US$1billion, followed by Nigeria, at 7.94%, translating into US$899 million in capital contributions.
Egypt, Africa's third largest economy, is expected to subscribe for 6.12% of the shares, contributing US$693 million, followed by Algeria, which is to be allocated 4.59% of the shares, at US$520 million.
Ethiopia comes up as Africa's fifth largest economy with a subscription rate of 3.41% valued at US$386 million.
The Democratic Republic of Congo (DRC) will get 2.79% of the shares with US$316 million followed by Kenya with 2.5% valued at US$283 million.
Africa's poorest economy, South Sudan, will contribute just US$64 million for just 0.57% while Cape Verde and Comoros will get US$112 million and US$110 million.
Each of the countries is expected to make payments of its subscription at once or in four installments of 25% of the amount. The payment period would last for between the initial four years to eight. The first payments are expected 60 days after the AMF treaty enters force.
Countries are also allowed to issue bonds in US dollars which are non-interest earning. The Fund will invest its fund in the international financial markets and is expected to maintain a sound credit rating, according to the Treaty, seen by PANA in Malabo, Equatorial Guinea.
The AMF will be based in Yaounde, Cameroon.
Africa: AU Summit Approves Creation of African Monetary Fund
By Premium Times, 30 June 2014 The AU Commissioner for Economic Affairs, Anthony Maruping, told journalists in Malabo on Monday that the Fund would work to correct balances of payment positions across Africa.
He said such positions were mainly caused by low export of commodities and high import volumes which exerted negative burden on currency stability.
The AMF would be established to basically help to tackle macro-economic matters in Africa, he added.
The commissioner said, "It is not true that there has been an economic leadership gap in Africa. We are creating an African institution because the UN Economic Commission for Africa is a global body."
Mr. Maruping said the Fund was expected to create proper lending system in Africa to correct imbalance in payments within the continent and ensure exchange rate stability.
"It will also work toward African currency convertibility, ensuring that currencies across Africa can be exchangeable. The Fund will promote monetary cooperation on the continent and speed up economic development. To achieve these objectives, the Fund will design formulas to lower the debt burden and other debt management policies in Africa and facilitate development of the African financial markets," he said.
The AU official said the Fund would have an authorised share capital denomination of $100 (N16,285) per share with a callable share capital of 50 per cent of the authorised share capital, which is $11.32 (N1,845).
The paid up share capital would be at least 50 per cent of the callable share capital $5.66 billion (N922 billion) denominated in $100, he added.
He said South Africa was expected to get the highest allocation of the 500,000 shares, with an 8.05 per share, translating into nearly $1billion (N163 billion), followed by Nigeria at 7.94 per cent, translating into $899 million (N16 billion) in capital contributions.
Egypt, Africa's third largest economy, was expected to subscribe for 6.12 per cent of the shares, contributing $693 million (N112 billion), followed by Algeria, to be allocated 4.59 per cent of the shares at $520 million (N84 billion).
Each country was expected to pay for its subscription at once or in four instalments of 25 per cent of the amount and payment period would last between the initial four years and eight years.
The first payment is expected 60 days after the AMF treaty enters force.
The countries are also allowed to issue bonds in U.S. dollars which are non-interest earning.
The Fund would invest in international financial markets and expected to maintain a sound credit rating.
The AMF will be based in Yaounde, Cameroon.
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