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Ms. Sena Eken, Mr. John F. Laker, and Mr. Shailendra J. Anjaria

Abstract

In late 1979, the African Center for Monetary Studies requested, on behalf of the Association of African Central Banks (AACB), that the Fund staff prepare a study describing the existing payments, exchange control, and exchange rate arrangements in the proposed 17-nation Preferential Trade Area (PTA) of Eastern and Southern African States, analyzing any payments obstacles to trade in the region, and recommending improvements in payments arrangements that would promote intraregional trade.1 This paper contains an updated and slightly revised version of the report prepared in response to that request.2

Ms. Sena Eken, Mr. John F. Laker, and Mr. Shailendra J. Anjaria

Abstract

Intraregional trade is limited, accounting for only some 4 per cent of the combined trade of the countries in the region. Although the share of intraregional trade in total trade varies across countries, it does not exceed one fifth in any country; for most, the proportion is 5 per cent or less. Intraregional trade is unbalanced, as evidenced by the persistent surpluses of one or two countries. As in many developing regions, the foreign trade of countries in this region is hampered by their reliance on exports of a few basic primary commodities, the lack of complementarity of the national ecomomies, transport and communications difficulties, and the paucity of trade information and contacts.

Ms. Sena Eken, Mr. John F. Laker, and Mr. Shailendra J. Anjaria

Abstract

Intraregional trade among the PTA countries is small in absolute terms and of limited importance to most of them. In 1973, intraregional trade (exports plus imports) amounted to $575 million, or almost 7 per cent of total trade.6 In 1980, mutual trade is estimated to have reached some $1 billion, which implies a fall in its share of total trade over this period. In 1980, the share of intraregional exports in total exports was 4.5 per cent (5 per cent including Zimbabwe) and the share of intraregional imports was 3.8 per cent (4.1 per cent including Zimbabwe)(see Table 11 in the Appendix).

Ms. Sena Eken, Mr. John F. Laker, and Mr. Shailendra J. Anjaria

Abstract

All countries in the Eastern and Southern African region except Angola and Mozambique are members of the Fund and maintain the exchange rates between their currencies and selected currencies or currency baskets within a relatively narrow margin.14 The currencies of Djibouti, Ethiopia, and Somalia are pegged to the U.S. dollar; the currencies of the Comoros and Madagascar to the French franc; and the currencies of Lesotho and Swaziland to the South African rand. The currencies of Kenya, Malawi, Mauritius, Seychelles, Uganda, and Zambia are linked to the special drawing right (SDR). Tanzania pegs its currency to a basket of the currencies of its main trading partners, Zimbabwe to a currency-weighted basket, and Botswana to a basket of currencies consisting of the SDR and the rand. Angola and Mozambique establish exchange rates for the kwanza and the metical, respectively,15 against the U. S. dollar.

Ms. Sena Eken, Mr. John F. Laker, and Mr. Shailendra J. Anjaria

Abstract

In late 1979, the African Center for Monetary Studies requested, on behalf of the Association of African Central Banks (AACB), that the Fund staff prepare a study describing the existing payments, exchange control, and exchange rate arrangements in the proposed 17-nation Preferential Trade Area (PTA) of Eastern and Southern African States, analyzing any payments obstacles to trade in the region, and recommending improvements in payments arrangements that would promote intraregional trade.

Ms. Sena Eken, Mr. John F. Laker, and Mr. Shailendra J. Anjaria

Abstract

Several arguments have been advanced for the establishment of regional clearing arrangements. Also, various reasons have been given why regional clearing facilities in developing countries may not always produce the hoped-for results. This section examines some of the main considerations that would influence the establishment and operation of a clearing facility in the Eastern and Southern African region.