The Common Monetary Area in Southern Africa: A Typical South-South Coordination Project?

Monetary coordination currently is en vogue in Africa. With the transformation of the OAU to the African Union and the launching of the initiative of the New Partnership for African Development (NEPAD; both in 2001) the old idea of a common African currency seems to be within reach. A common African currency and a common central bank for all AU member countries is set for 2021 (Masson and Milkewicz, 2003; Masson and Pattillo, 2004). According to NEPAD, the transition process to monetary union in Africa is to be marked by the establishment of regional monetary unions for already existing integration projects. One of the prime candidates among existing integration schemes is the Common Monetary Area (CMA) in Southern Africa, which is regarded as an unusually longstanding and successful monetary coordination project. It is based on a tripartite arrangement between South Africa, Lesotho and Swaziland that came into effect in 1974, at which time these countries were known as the Rand Monetary Area. From our point of view, to understand the functioning of the CMA and the outstanding role of the Republic of South Africa, we need to take into account the political and historical framework in which the Common Monetary Area has been set from the very beginning. Therefore, we will give a brief overview of what relations were like in the region of Southern Africa pre-1990.