UNITED NATIONS
* ECONOMIC AND SOCIAL COUNCIL
Distr.
LIMITED
E/CN. 14/AMA/WA/4
4 June 1975 Original:
FRENCH
ECONOMIC COMMISSION FOR AFRICA
ASSOCIATION OF AFRICAN CENTRAL BANKS
FINAL REPORT OF THE FOURTH ANNUAL MEETING OF THE WEST AFRICAN SUBREGIONAL COMMITTEE OF THE ASSOCIATION
OF AFRICAN CENTRAL BANKS Accra, 2-3 May 1974
M7 5-H25 r
ASSOCIATION OF AFRICAN CENTRAL BANKS
WEST AFRICAN SUB-REX3ICNAL
FINAL REPORT
OF THE FOURTH .ANNUAL MEETING
ACCRA, 2t^II>-3H), m* 1974
I.
n.
in.
IV.
v.
VI.
VII.
vin.
IX*
x.
XI.
XII.
xin.
XIV.
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CONTENTS
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Introduction;;.; &,- ■•;:;■:■' ■ ..-■•: :»k-; - r; i;" '. -i Attendance
Opening of the Meeting y ■
Adoption Gf'Agenda,..-.,:r_w / vciL " . ■ .'.
Greetings :• .•..,;*!-.-.'■.;■ j . :■•:- :.-•• ■•■ :;';: "■ -';v •». :i-.. :
Revised Report;of the Study Gtoup'-on'Guidelines ' for the establishment of a idearirig arrangement '■
among the member states of the West African : ;
Sub-regional Committee . ' . j.
Draft Articles of a West African Clearing" '. - House Agreement
;-.vi--,\y. ■■' • ■■'■ '"■■ ■■" • ■ '■ "'■ '•' ' 'r 'i- ';-;
Arrangements for the Implementation of the' " ■ West African Clearing House Agreement '■■■'-■
Report of the Seminar on Problems, Ways ' and Means of Promoting West African Entreprcneurship
Discussion on International Monetary Situation with Special Reference to.the Implications of
the oil crisis..: \ , . . -.i ;u:-i<- .;*t :. ' . .
Discussion on the possibilities of developing■„• - ■;
a Common West African Capital Maorket, ; . : Other Matters
Date and Place-olthe Next Meeting; .-.';■ .^ ■-•■-. .: -;:
Closing Address APPENDICES
f
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I. Introduction
The Fourth Annual Meeting of the West African Sub-Regional . Committee of;the Association of African Central Banks was held in the
Auditorium of the Bank of Ghana, Accra from the 2nd to the 3rd of May, 1974. Dr. Amon Nikoi, of the Bank of Ghana and Chairman bt- ; the West African Sub-Regional Committee for 1973/74 presided over
the meeting. ■. ... .,. \i
II. Attendance :^^..:. ■ - - ■ . .-•'.-<:' <;-?
The meeting was attended by representatives of: all meitiber -^
central banks. A list of the names of the delegations that represented each central bank is attached to the present report as Appendix 2. i.';
The Secretariat of the Association of African Central Bank was
represented at the meeting by.Mr/.-.W^iKatabi^Cfcef-of the Fiscal-' ■':
and Monetary Affairs Section; of the JSconomic Commission for. J " ' Africa (ECA). Mr. Michael Santos-of the Publicity Section of the-r-\
ECA attended as observer. k ■•"..'.■.: ",. ^ .-•. ; ^. i7-■
HI. Opening of the Meetinga:^,ur :.■;;•;;,; „■?£* . r._■ -!.■■; r,.-;-^ . The meeting was opened at 10.00 a.m. on the 2nd May, 1974 by Dr. Amon Nikoi, who thenvinvitedrCoU^.K, Acheamp'QngtH«ad of"-.
State and Chairman of the National^ exemption Council, and >~w: ,'^'v Commissioner for Finance of the Republic of Ghana to deliver the opening address. The text of this/addre'ssis reproduced as" *"- J '•.*■. -".
Appendix 3. ,r..«:*i:.;V.;. .\ v:-..'.' ■-'; ' '^"'■ *;•■•.''•■ '.■■:''-V IV. Adoption of Agenda
..-, •; -■■iCV:V:,;--I':-.'i ..'.. ; i1:"- ■.:{;■ ' ;-;-~^ V ■■ ■"•'•:■ '.'.-■ ■..?..!.
The Committee had before it.a;provisional, agenda'which..:- -:■:•:•
the Chairman submitted to the meeting for adoption. The'agenda; vi():
was duly adopted with the inclusion of items namely;
(i) 'Information.on the'proposedSeminar and "•■--;■<■.■ ■f':J-:s' cX. Programme of.Work'of :the .Association' of*- ■.■;.■'-■'■.> -.*, r
African Central Banks"; and
(ii) "Arrangements regarding the implementation
■i :j.: of the Study Group Report after: adoption '!;■' ■• ^ ">,. ■':■:■,.
The approved agenda is given in Appendix I.
2/...
V. Greetings ' "< *-'^r. '['■ ' " i; .-.■' :'-'*f - ' "ir:-' • **" ' J 5. Stfr;. Wi-Katabi conveyed to'the meeting the best'wishes of Dr. R.K.A. Qardiner, the Executive Secretary of the Economic ~
Commission-for-Africa (EGA)'-and inclicated that the E.'C..X;.''. * J *"'' attached great-importance to the establishment'of a*clearing* J '
arrangement among West African States. He expressed the hope" that ;Jthe results of the meeting would be far reaching and instructive.
VI. Revised Report of the Study Group: on.. ."''■-._-£!: '."c
Guidelines for the Establishment of a
Clearing Arrangement among Member '' ' * ' ' " "
States of the.West African Sub- ' \* \ ' l ■1;J ' ^ '':^' ' T, Regional Committee - :- :; |O ■""-'-' •■ '-/'' ■ ' ': ;- \" 'J ■ - '-' l
6. Under this item, the Chairman called attention'to the iU"
revised Report of the Study Group; ori'"Guidelines for the establishment'\
of a clearing arrangement among'm'ember states of:the'West _ ''"*" ' ' i African Sub-Regional Committee" and then invited Mr. J.K.E. Cole/. ' Director of Research, Central Bank of Sierra Leone and Chairman
of the Study Groupto introduce the report. ' Mr. Cole'recalled' :'\' that at the Third Meeting of ther West1African SuK-Reglonal Committee
in Banjul,'The Gambia; Governor's adopted the Report of the StudyGroup on Guidelines'for-the1 establishment of a clearing arrangement", with some reservations. The Study Group was then instructed to ;liit "'
pursue the study further taking into account the'reservations and ,' comments made at the meeting and also to identify the mechanism' " l and technical details involved, in the practical implementation of t ,v
the meeting to a number of changes'and new paragraphs that hab" u ' been inserted in the.revised Report;. J^-:-V".LlL.'_..'_./:.-*- .. -
7. Discussion on the revised Report centred largely on" ' paragraphs 57/'58 & 59 which described the operating mechanism and procedure ofthe proppsedF'lblearingarran'gement. It was argued that the process of operation- in the clearing arrangement
described in* paragraphs 57/58 r&'59Twas far ;froinclerar.' The ' I ''"
operation would bring central banks into the front line of conimercial * :
transactions and thereby expose them to unnecessary conimercial risks and arbitration.
3/...
8. The consensus reached was to delete paragraphsf57,:>
58 &59 and to replace them with a new formulation submitted by the.Nigerian delegation.. The new.formulation of paragraphs 57,58 &59 which is reflected as paragraphs 59,.;60, 61 ofthe. ,
final report on ""Guidelines for, the, e^tablistunent of a clearing, -
arrangement..;...,... "is. reproduced in Appendix 4, of this-r > - - Report. .'.'.. ... .. . . ,. .-.: ..,,--,' \(. .. . -.'",.- VII. Draft Articles of a West African
Clearing House Agreement,.; . ,, ... r .-:. - :-. K-, .- 9. The Draft Articles ,0? a" West AfficaiT^Clearing House"
Agreement was submitted along .wjyththefeyised
"Guidelines for the establishments a clearing arrangement 7 among member states of the West African Sub-Regional
Committee'%..,The West African Clearing:House Agreement;in was discussed,, amended and agreed,upon article by article,^., ;>.,
The'adopted. Agreement is attacli^d,tq this Report, as .. , -, lT.
10. there were no provisions in the Draft Agreement .onTt... .;• - transitional,arran'gements.for.the implementation-of the ■ .1 1
Agreement nor on matters relating,to,iinmunities and privilegesJ;, to be, accorded.to the staff and property of the plearing House>;
It was noted that.these provisions were necessary and it was- ,-,..
therefore agreed^that these provisions should be included'in .( r>;
the final text^of the Agreement.. r..; . ., .,.,.. ^ ; 1 \ ,;
VIII. "Arrangements for the Implementation of,
the West African Clearing House Agreement -: ; ,' > , •:
11. The.(de>egation of the Central,Bank of Sierra Leone.;
submitted,a paper (See Appendix 6j,on this item which formed ,,,.
the basis of discussion. It was agreed .that.the implementation,, of the adopted West African Clearing, House Agreement.should ■..
proceed in accordance with the programme given in the following,.,
paragraphs.'] . •'./ n ,.. „, .,-*. "...',.-
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12. By the first week in June.I974the current.secretariat
of the West African Sub-Regional Committee i.e., Bank;of Ghana
should submit the adopted texts of the Report on Guidelines *for the .establishment of .a clearing arrangement and the West 5. t African Clearing House Agreement to Governors of member ;( ....
banks. .., =:;■
13. Governors on receipt of the Report and...the text,of .the,, w-(.7-/r;
Agreement would be required to Initiate internal consulations with a view to obtaining the necessary clearance from their n-t >:i respective governments, pn completion of in^nial consulations.»j ^.fr3 Governors would then.report.back with,any comments,and-, ,wir-, Ar,,-u suggestions to the Chairman of^the, West, African SubrRegional - ^ ■^.v*
Committee for 1974/75. The time agreed, upon for,internal , v\ ,:
consuiation and reporting back to the.Chairman by member,.; b^ ,:>(£(!
banks was limited to six months.-. • — ^ v- l(f r; ■- //-1-i.ri^^^q^^
■'••■.»^.;.--'if * : c. :/;: .'?-j' -(.'--i' '. . .' ...: Ji' :.. ■'* ..*•"•* ■yni'SfP 14. The Chairman on receipt of the comments and suggestions * j- of member banks would then reactivate the Study Group under the Chairmanship of the Director of Research, Central Bank of, Nigeria to examine,and.consolidate the;c.omments and suggestions receiyed.., ; into the adopted articles of the West African Clearing.House .. .;:.-(, Agreement.,...^ , , ,.. , ;., ;,/:wM-^,-.-^ ;-. .. - ■? a.1 . ..■■;jicf?
15. Provided there were, no fundamental issues to be resolved,,.-,:;
from the comments and suggestions of member banks,.the Study „■ -^
Group would be required tp arrange for the Economic- Commission . ~j for Africa to undertake the legal drafting of the final text of the
Articles of.jthe West African.Clearing, House Agreement..,.;,' ; ;L-
16. On completion of the,?final .legal drafting of the text, \-... ■ v...
the Study Group would then for.ward cppies to Governors of .:. . . -:Z) member .banks far final clearance with.their governnents.^ .n,..; : :
17. The above arrangement it was agreed should be completed , ,;
in time for the West African Clearing House Agreement to be initialled by member banks at the Fifth Annual Meeting of the West African Sub-Regional Committee to be held in May 1975 in Lagos.
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IX Report of the Seminar on "Problems, Ways and Means of Promoting West : African jEritrepreneuriBHiiJ" : --
18. Mr.; A.SVC. Johnson-, Deputy Governor, Central Bank, of
Sierra Leone was caUeti u£briyi:6report on the Seminar on "Problems ,
Ways and Means of promoting West African Entrepreneurship"which was organized by the Central Bank of Sierra Leone and held in Freetown in November, 1973. : :1; •-.- - - -
19, In his report, Mr. A.S.CVJohrison informed the meeting 3' that the Seminar was chaired'by :Pr6fessor N.A. Cox-Geor£e of the
University of Sierra Leone; Official participants included delegates :
from thesix member central banks of the Sub-Region, the Ministry-
of Finance of Liberia; the" International Monetary Fund, the World "Bank and the African Development Bank. There were also ; r representatives of the private sector from Nigeria, Ghana and ■'- Sierra Leone. All in all, the number of participants and observers
at the seminar'was forty. ; ' ■ - - . ■ '
2O'.vThe Seminar held eight sessions j seven of which were ■ ' devoted to discussions of papers submitted and in introduced by -; ■ : participants and one to a debate on the tionclusions bf the Seminar-.
Participants, he recalled, expressed the hope that the conclusions arrived at the Seminar would stimulate action by central banks and governments of the Sub-Region.'In conclusion, the Deputy ■ Governor/indicated that a full text of the proceedings of the Seminar ' Including papers discussed would be published in due course. ' ;
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21. The chairman thanked the Bank of Sierra Leone for '' " '*-' organizing the Seminar. In the discussion on the Report it was
suggested that the French version:of the Seminar's Report and '.
conclusions should be revised. It was further suggested that before ' the book on proceedings of the Seminar was published the French' ' version might be given to the Economic Commission for Africa for translation.' : : ,,. ■ '. •. ;: ■'V .■'■■.■■'•
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X. Discussion on International Monetary . .. ,.: Situation with Special, Reference to the
,, implications of the Oil Crisis . ,.,: ■}:•
22. Under this item, members discussed the international monetary
situation generally but focused attention in particular on the proposed I.M.F. Oil Facility for countries badly affected._by,the,,oU crisis. ;.-
23. In the discussion on the I.M.F. QilFacility two.main points
were emphasized. Firsty that the I.M.F.. OU Facility'uS^er its
present proposed struoture based on the quota system"would not be of. m,uch benefit to the African countries, who were, in gre^atneed of assistance. The proposed structure would, rather favour the ..; , developed countries. , Secondly the rate of interest proposed for. rj . the. facility would be very onerous on African countries since it .- - >i;,
would increase.their.repayment burden. ■. j ... ? • * < ,"••■ *
24. It was therefore urgeg-that.in view of the fact that.the .,..,'
formulae and.parainetersusually proposed by I.M.F. foivdistribution
of I.M.F. resources tended to be unfavourable to the poor countries, African countries should consider developing their own experts who could make counter proposals to .that of .the I, M.F.; experts."The meeting also accepted the suggestion that member; countries, ...
should wri^e to their Eraputive Directors in the I.M.F. pointing ■-* ; but the deficiencies inherent in the proposed scheme for oil ,- -, - -.>■.
facility. . . . . . -. , . .
':':. ' '■: ' ^r' '. • '' ' . .' .' L " ' ' ■ '' '.' -' . • ' ■ ■' .>•-. "i: •)''■
XI. . Dispussion on the,Possibilities of Developing _.. :>; ^. , - , a Common West African Capital Market <_ ■ -t i. .,;■-,;.• t .. , ';
25. Discussion on this item was in general terms. The ..i\
consensus was that because of the absence of'information and data
before .the meetuig.on the .operation yof capitalimarketsin the"
respective countries of member banks, it would not be ppssible : .t to hold a detailed and useful discussion ,on the subject. , r ■ . ■ ,-
26. It was, however, decided since, the subject was of interest
not only"to. the West African SubTReg>onibut.to the whole of Africa, >:
to recommend the subject as an item on the agenda for discussion
7/...
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at the next annual masting 6f-the parent Association in 1975.
Furthermore, it was decided to request the Economic Commission for Africa to start collecting information -on-the operations and experience of capital markets in other parts of the world
especially in Latin America. "" " ~"
XII.* - Other Matters'
■ ' ■' Proposed Seminar andProgramme of .' ' '
'■ Work of the Association • ■
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27; Under this item.'kr. W;: Katabl of the Economic Commission of Africa informed the meeting that the Association would hold its""'[
next Seminar in Addis-Ababa, Ethiopia from the 5th to 16th of* ' "'!'
August, 1974. Thef subjects :of th'e Seminar would be (i) The Effects of the International Monetary Situation on Trade and Economic "Development of African countries and Measures to be adopted by
African Central'Banks to offset its Adverse Effects; and ' j ;
(it) The-Causes oflnflatibn in African Countries and their Effect's.'.
on Economic Growth; • - ;! -: - ' '.>.'>"
28. On' the Association's Programme of Work 1973-75/ ' ,', Mr. Katabi indicated that priority was being given to the study !
of the' measures tocouriteract'the effects of the internatiprikl monetary
situation on trade relation and economic development of African '".
countries. On the other subjects of the Programme, any bank interested in undertaking voluntarily a study or studies should contact the secretariat.of theAssociation now with the Economic Commission for Africa. :; ■ ■ .. . . * ' .
XIII. Date and Place of the Next Meeting J
29. The Chairman indicated that under the principle of rotation, it was now-the: turn of the Central Bank 6t Nigeria to chair and host . the next meeting of the Sub-Regional Committee.
' ^ 'Mr. Ola Vincent, Bank-Adviser to the Central Bank of "
Nigeria accepted the honour and said it would be a great pleasure
'JJ.
8/..
• o-•■•' '
for the;:CentralVBankrbf Nigeria, to^host XKe' ne^ineeting/^He suggested"that~the~"date of the next meeting should be early June, 1975, but some me^ters/-^cdnfed;j^^atJl^E(idate would
conflict with the earlier decision of the. SubrRegional Committee to hold the Annual"Meeting in May.ever^ year. It was agreed that the Central Bank of Nigeria-should communicate the exact date of the meeting to member banks later.
.f.-j.r"^; .J '-'vr.■/:£' --.-:/'. .i.'&Vi v: j.i "I iC-ui^ 2^-"<Q ■ >?■
XIV. Closing Address
.;'•". ■ ) i r;.;iiqouA .^
30. The chairman in his closing address expressed the
happinesSiOf.the.Bankof Ghana in hosting the meeting andrthanked . f.
delegates for the frank and friendly atmosphere that prevailed in the cpursejOf.thejmeeting;,: Mr. Ola/Vincent,: Bank Adviser;
Central Bankiof- Nigeria, replied on behalf of all the delegates.
He thanked the chairman and.'the' Bank rof Ghana-tor, the kind hospitability and friendship extended to delegates throughout j,i their staysin-Ghana;- . ,-!...jj-ti -. is^7/ 1«. i.:. .i.iiiiu'iO.'- (d)
' io
-I -■'-::.
"y
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APPENDIX I
WEST AFRICAN SUB-UEGIONAL COMMITTEE
yQF THE ASSQCIATIOK..QF:-AFRICAN-CENTRAI,^BANI03
"\. :;■:-•; ■'.; FOWTHJ ANNUAL MEETING, --' ,..; ?-: ^'i'
.i-:Tf.-i,.-:.- :":;. : ACCRA-2ND. - 8RJ3 MAY, 1974- ..-;.? .:.•-. ■■j!0--!.
1. Opening Address by Head of State and Commissioner for Finance.
2. Adoption of Agenda
3. .;■:./Discussion of the Report-prepared *y the Study Group:' ; -.
:■ <.■.-■■■/■ ;_*..-.. : ■. .:■;.-•:.:•;•';;-. . I1',>" ■".:'• ■"■-;: -Uv-1: ..-./. J '; ) ■•: ..••1?-.!,;■.
<a)i" ', Amended Guidelines .For tbps'Establishment:.of a ; ';
..- ^i.-'-ClearingArrahgenient between Member States of ' •"
i:ni.'the Sub-RegionalvCommittee. i:-. ..: ' ': '"■'■"! '-v ."•..-:' .■:'*
(b) Draft Articles of West African Clearing House Agreement.
(c) Arrangements for the Implementation of the Agreement, 4. Report of Seminar on Problems, Ways and Means of Promoting
West African Entrepreneurship.
5. Other Business :
(a) Discussion on International Monetary situation, with special reference to the implications of the oil crisis.
(b) Discussion on the possibilities of developing a Common Capital Market.
(c) Date and place of next meeting.
6. Other Matters :
(a) Proposed seminar and programme of activities of the Association of African Central Banks,
7. Closing Address by the Chairman of Meeting.
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■ J A r-
CENTRAL
1.
2.
BANK OF .... 1. . ;,-.
2>..,o
4, 5.
CENTRAL
1,
2.
CENTRAL 1.
2.
3.
- 10 -J
appendix-2 :.2?ri.;-'.
>.■;•; ■. v ' ' " - ' ..."
LIST OF PARTICIPANTS
BANK.OF THE GAMBIA -,
Mr. S.S. Sisay
Dr. George H, Bossey GHANA-
Dr.. Ampn Nikoi - •
MxvE.F*. Anno „ • -
Mr. S.K, Botchway _ • sl^.
Dr. A, Mohammed *
Mr, K.A. pougan •
BANK OF MALI
Mr, Cumar Makalou •
Mr, Younoussi Toure •
BANK OF NIGERIA
Mr, Ola Vincent •
Mr, S,B, Falegan
Mr, J,O, Sanusi •
Governor
Chief Econpmist "-/aT'^a
.... ^ ^ ,. a.
Governor^! .•;.,« ,s Deputy ppyernpr ^ Ex6Qiittve> Director Chief, Research DepU
Deputy Chief, Foreign Operation
-.' , .f
President
Deputy Managing Director
Bank Adviser
Deputy Director of Re search
Deputy Chief of Banking Operations
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CENTRAL 1.
2.
3.
CENTRAL AFRICAN
u
2.
3. \ 4. .
5.
E . C . A 1.
BANK OF SIERRA LEONE . Mr. A.S.C. Johnson
Mr. James K.E. Cole Dr. A.B. Taylor
BANK OF WEST STATES■
Mr. Ed. Kodjo Mr, Daniel Cabou Mr, Pierre Sanner
Mr/Kassoum Congo -•
Mr. Marcel Kodjo
Dr. W. Katabi 2. Mr. Santos INTERPRETERS
1.
2.
_. . . \ JV
Madame Jo Chevassus Miss N. Engman
t)eputy Governor Director of Research Deputy Director of *';;
Research
President.; ; . . Deputy General Manager Director of Research
■'■'Manager, -k.-Ct-E. A. -C.
Agency • Upper Volta
Head Office* Research 'Department ■
■..'■ .. - -■ . .- -'-. ■ .-
Dakar Abidjan
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SECRETARIAT AND CONFERENCE ^
■ OFFICERS ;.:; -.,;,:, :y;:-:^. ^-- .- w, .w ,r l.v.,: Dr. A. Mohammed :;
;:-''' - i*f$['?if>Z ■'■ :Dr^Victor 'AUpui^.^'^''..^
." -:^C1'Mtes Men Welbeck.':ii;:""'\~-
1 ,. 5?, Mr, Kofi. Ata-BecJv... o;.. ;r.
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- 13 - APPENDIX 3
TEXT OF SPEECH DELIVERED BY-COL. UK, ACHEAMPONG
HEAD OF STATE AND CHAIRMAN OF T*TF MRPMr. Chairman, Distinguished Delegates, Your Execellencies, Ladies'and:
Gentlemen,
I have great pleasure in welcoming you to the opening session of the Fourth Annual Meeting of the West African Sub-Regional Committee of the Association of'African Central Bank's. We are particularly happy to have
among us so many of the leading administrators, and experts,in the field ofmonetary and banking matters in the Sub-region.' On behalf of the National Redemption Council and the people of Ghana, I extend to you ajl a cordial welcome, ahdwish youa-very pleasant stay in bhana. " '*"'' :'""
Ydu'have ah important agenda to consider ai your current meeting,
including subjects such as the possibility of the establishment of a
multilateral arrangement designed to facilitate settlements and payments
among member central banks in the West African Sub-region.Trade relations between member countries of the Sub-region are far from satisfactory. Trade among our countries still constitute a very
small percentage of our total trade transactions with the rest of the world.This abnormal feature of our trade relationship or better still non- relationship calls for correction. You, as central bankers responsible for the formulation of policies that do affect our trade and payments
transactions have a vital role to play in the promotion of trade amongthe countries of our Sub-region. I am aware of the many problems which inhibit the growth of trade among our countries, but with co-operation on all sides, I am confident that they can be surmounted. I should not be exaggerating if I said that any monetary and payment measures taken to facilitate and ensure more trade transactions within West Africa would be a step forward in laying the foundation for a genuine West African
Economic Community.
An economic community in West Africa is a desirable and necessary prerequisite for the full and viable development of the whole
region - a region so rich in human and natural resources. The Government of Ghana attaches great importance to the ultimate achievement of this objective. The need for such an economic arrangement has long been felt.
14/...
- 14 -
The advantages are well documented. But we are still some way from
achieving this objective. I trust that the next meeting to be held in connection- with the. formation of the West African Economic Community .will bring ^s ''.'- ' us nearer our goal. In this regard, your approach to the problem beginnings with working out of a multilateral clearing arrangement among member central banks in the West African Sub-region should help.to provide al
sound basis for .the Community, ■•--.. , ■ . . o : ' ■' •.-■■' '■-. -: ■
■j,*< '■'■ * '. ■■ i .} .1 '■"•..*: r" - .. v -". j. ■ i .'■'■■ - *■'[■' .>.-;-■,.;.ipn.the international scene, I am informed that one of the topics- ' ^' your meeting will be discussing is the impact of the energy.crisis on the \. -At internationals economic and monetary situation. .: i ' ■'■ . ' : . . "-i-_ 1'j
Your meeting 13 taking plnce dui'ing a period of great uncertainty - on the international economic scsns. Developments in the world economy are dominated fc>y progressively increasing inflationary pressures in both the-develpped and developing economies. .This situation is further
aggravated'by .persistent instability in the foreign exchange markets. The - reserve currencies which hitherto have formed the backbone of interhational ■ trade transactions face an uncertain future. We live in a period of ■
constant currency crises, and the disruption of the internationalmonetary ;1 systerri;occasioned by the .difficulties, of the reserve currency countries has ■ yet to be repaired;. < :; 0 ■ . ■ ■'"• ;
i These troubles in thoip.tornational monetary -field have recently '■
been compounded by tbf? sudden-emergence of the energy crisis and the ■ ■"-' exibeequent 'dramatic increases in: the price of crude oil.' The effects of all: "
these strai-s1 ■sr.d constraints ax cur rarlou's economies have been unfavourable,
These international economic factors havemore than ever sharpened "
the needlor co-operation amccg us in.almost all fields of common interest.--' '<- In this context, :your Committoe provideo a very important forum for the ' l ■
exchange'.of views and.fe:qperienoes forsaking a common stand on issues -1 '• " ■
of international monetary-reform sind related economic matters and for'"' • ': : ensuring that the adverse impact :of recent international economic developments on our economies is Icnna^ad.-
s -'^ •: '" • ■' ,'i.i:^ -rz' ■ -.- - ■. .'. z /. -i ■■ ■ _> ,' '.
,.' My attenticivhas.aiGo been■'dra\vn*to the fact that your Committee r- .!'
recently organised in -Freetown., -Sierra Leone, a successful Seminar on the problems of promoting W6St Africsx entrepreneur ship. The-development of :•
our economies:and the achievement*of growing prosperity and.rising- ■ r., . .,li\- standards of living for our peoples, are to.a large,extent, dependent on our ■ •
15/...
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ability to:develop 'within ourrcountries a large-body of virile and self-reliant * indigenous .entrepreneurs .who will develop and manage our industries and
agricultural enterprises.'-'• ■ ■■ ' . , ; .
In this respect; I wculd like to take this opportunity to advise J you to be more innovative and revolutionary than you have been in the past; ; L As advisers and experts on financial and fiscal matters you tend to be
cautious and insist on precedent. This is perfectly understandable." However I hold the view that:the problems that we face as developing countries are ' >
very different from those that beset the developed countries and therefore you should not copy wholesale the policies that are practised by Governors
of developed nations.- ;- . ■ •
1 r Not long ago a Governor of the Bank of Japan could look on '" • approvingly if a company were to be financed virtually with debt, the financial structure.of.Japanese companies in the years immediately following the "r..
end of World War II was characterised by very high debt to equity ratios.
With the extent of .their development, Japanese bankers can now afford to. * ' insist on low debt to equity ratios as a condition for financing companies.1 • In short.-therefore, we-must tailor our banking methods to suit our particulars ■ needs. For example if I may take the case of Ghana, our number one -r.S . . :- ■-.
priority is agriculture; the question is, "what is the Central Bank doing to make:agricultural credit-easily available? What prevents the Central
Bank from getting-all the commercial banks in the country agreeing that -■ ■ ''' a certain percentage of the loans they make in any one year will be for :.. ? agriculture?.1.1, In another area .where the priority problem is one of i. -■".
indigenisation,what prevents the Central Bank from making sure that a certain.proportion of loans extended by commercial banks in the
particular country go tc\the indigenous people? The import of the question r. : . that I am posirigis that if we were to stick closely to traditional central
banking methods,, it would take us a long time to achieve our development y . objectives. "Shall we therefore resolve.now to introduce some revolutionary . innovations/into the art of central banking in our part of the world? ;: :> ;•■-■:
Mr, Chairman, Distinguished delegates, Your Excellencies, Ladies-and':Gentlemen, I should now leave you to attend tc your business,
but before doing so', allow me to remind you that in all your deliberations, . :«. . you should have as1 your aim the formulation of concrete proposals which ■:' ■ . , will promote -the-well-being and prosperity of all our peoples, and promote .- x and safeguard.the-economic independence of our countries. . :i,-_:
May I once again extend a hearty welcome to all of you and to wish you a successful Conference.
16/.,
- 16 - APPENDIX 4
FORMULATION OF PARAGRAPHS 57, 58 AND 59 OF THE
RE PORT ON GUIDELINES FOR THE ESTABLISHMENT qFa CLEARING ARRANGEMENT AMONG STATES IN THE WEST AFRICAN
SUB-REGION SUBMITTED BY CENTRAL BANK OF NIGERIA
57. It is envisaged that both the importers and exporters would have concluded the sale and shipment of the goods concerned under the terms of the contract sale and the timing of payment for the transaction.
If the sale;of goods is covered by an irrevocable letter of credit, payment^
will be made by the commercial bank concerned to the exporter strictly " <;
in accordance with the terms established for payment for the goods by the commercial bank of the importer. . ■ \-,- u-
58. Under normal circumstances the commercial bank of the exporter would pay the, exporter on;the.submission to it of the relevant documents of shipment etc. In turn it would claim refund under the terms of the letter of credit from the commercial bank of the importer.
The commercial bank of the importer will forward certified copy of the documents and credit to the central bank of the importer country which wiU in turn credit the clearing agent, under advice both to ■ ■■
the clearing agent and the Central Bank of the. exporter country.
59. On receipt of the advice, the central bank of the exporter
country will pay the commercial bank of the exporter. The centralbank of the exporter country will asloinform the clearing agent of the transaction :, In effect, the clearing agent gets notification of .the-
transaction from the two central banks-and the records would.be ■•< -?.-
identical.
:<:o.-: t
17/.
a ■
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APPENDIX 5
WEST AFRICAN CLEARING. HOUSE
OBJECT MEMBERSHIP AND DEFINITIONS
::.!,/,. .- -,■ i.--' " v -ARTICLED ' '' ■' ■■ ■" 'j:
,'..-:.. -, . .:-.. vv." :—^~T~ ■ - ■ ■ ' ■■ "-■'■' ' . This agreement.establishes a*machinery'for the multilateral settlement of payments among Central Banks of the West African Sub-region with the.following objectives :- -' ' ? *■■:..•,-•
(a) to promote the use of members' currencies for ': ' sub-regional trade and other transactions ;
.-, (b). .to effect economies in the use of foreign exchange ;
. (c)- • to encourage participating member countries to J' "
. liberalise trade among themselves ;
(d) to promote monetary co-operation and consultation
.among participating Central Banks and Monetary ' Authorities.
■ .-■■,' ■ , . *. ■.'j
■■".. ' ' - ARTICLE 2 ■ ' ■'•' : ;' y' '
Membership is opened to all" central banks in the West'African
Sub-region as defined by. the Association of African Central'Banks;
ARTICLE 3
In the text of this Agreement the following words shall bear the meanings assigned to them.
"Agreement" means the West African Clearing House Agreement",
"Clearing House" means the West African Clearing House", "Bank"
means Central Bank or Monetary Authority of members of the Clearing Agreement. "Committee" means "Committee of the Exchange and Clearing System", and "Executive Secretary" means the Executive Secretary of the West African Clearing House.
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"Convertible Currency Mutually Agreed Upon" means convertible currency mutually agreed upon in accordance with rules established by the Committee.
CHAPTER; H V ■ v; :T \ A/ *j
.. UNITY OF ACCOUNT■;, PARITY AND GUARANTEES^:
ARTICLE 4
a) All transactions going through the Clearing House will be expressed in units of "West African Units of Account" (WAUA), the par value of whioh will be determined by the Committee. : This par value will determine the conversion rate for national currencies in accordance with the parity which each Bank or Monetary Authority will from time to time declare with the Clearing House. This parity should always be identical
to thatdeclared ,wlth.the International Monetary Fund. j;; :-../'
b) Should.the Committee consider that prevailing conditions do •
not permit ;the. application of fixed parity in definingthe .Unit of Account,' effective market rates should be applied. *-.•,.■_ ... • -',/ ;■ .■ ••-. ■■ ■ .-.-.• •!*:■ -:■■ . ARTICLE 5 ■ .- . ■-•<-. ;7 . ■ '■/*■
Each.Bank; will communicate daily by cable or telex to the ' t; -:.
ClearingHpuse and .other members of the Agreement the.day's closing11 1 exchange rate between its national currehcy and that of one or. more of;■■=:
the convertible currencies mutually agreed upon,
ARTICLE 6 '
Any alteration in the parity of the currency declared by a Bank*:
in accordance with Article 4 should be communicated immediately to the Clearing House and other Banks for corresponding adjustment to be made to the exchange value of the currehcy~.
-., - -t . .ARTICLE ?• - ..vta. ■ y.". ■- -'■.-.
Each Bank guarantees t6:.the other Banks the conversion of its currency intpWest African.Unit of Account at the parity or. exchange rate.: .
indicated in Article 4. ... . ,. ;; ■
19/...
- 19 -
. ...., • .:■: ... ;.' ARTICLE .8 ;■ y '. ■•-.: W:/
Each Bank guarantees to the other Banks the conversion of its currency in West African Unit of Account, at the declared parity or exchange rate in accordance with Article 4 of the remittance in transit and other items for collection; at the date of issue, or contract date:whichever is applicable.
• CHAPTER HI ..-/.- ••.-.,._
CREDITS AND TRANSACTIONS ,:■
ARTICLE.:-9
Each Bank wUl extend to the other Banks takea'collectively-a'-, ■
monthly iterim credit line equivalent to twenty per cent of its country's total annual visible trade, i.e. imports plus exports, with these other Banks calculated on the basis of the annual average of total visible Sub^-' ■•■■.":
regional trade with the other countries, taken collectively over the latest ■ -' three»year period for which figures are available. The debit line allocated to each member Bank shall not exceed ten per cent of its total annual visible sub*regioual trade as defined abcve. This method of calculating these credit and debit lines for each Bank will be subjected to review and revision by the Committee-;- if necessary, at the end of twelve months from the date ''■
of commencement of operation1 of the Clearing House. •--.*.:..
ARTICLE 10
Any Bank on its own initiative may increase the amount of the monthly interim credit line referred to in Article 9. . vw-'i--* ' :^'
■-. vi-■ 4 ■"■..■ -■ ':■■ —ARTICLE- 11 .--i ••&>*, ■ ■■••'.■■-.. ■ •'. ,- For the purpose of this Agreement, transactions will refer to all trade and non-trade transactions between the countries of member Banks
except those specified by the Committee. In any case, payments for re-exports defined as exports which originated in a completely finished state from
countries of non-member Banks of the Agreement-y shall not be made ; through the Clearing House. ■'•' •>-.•■'*■ ■"
. r 20/...
- 20 - ARTICLES 12
In the case of inter-governmental grants and loans, contracting parties may agree in consultation, with their respective Central Banks not
to channel such transactions through the Clearing House.1' ■■- ■ : - " '
■■:.-.■■ r- ■■ '■ ■■ " -■-■■-■■:. • ■ " ; ■ - f ■■..•'.:' *'■■ ^ii.":-";^
!.. -h ■-'■■■ ...-. ■ , " ARTICLE' -13 ■ '■ i^b^hv.-,"-:
.; --....-, ; ' .'■:-■■■■ . . . ■ i :.■ " ■* "' ■" •>::-'■)::'.< .£■■ -••'•;«
-Payments for transactions among member countries of the " ' West African Monetary Union (WAMU) are exempted from the provisions of this Agreement as long as they share the common currency issued by the Central Bank of West AfricanjStates (BCEAC)*
ARTICLE 14
Payments for transactions between the Central Bankof i; -•'"'- Mali and the Central Bank of West African States (BCEAC) afe also -' exempted from the provisions of this Agreement provided that the two Banks maintain mutually free and unrestricted settlements,
. ■ ■';>-: ARTICLE! 15 '■■.":'■'■■
The relevant advices of- inter-Bank transactions under'this" : Agreement must be communicated immediately to the Clearing House in accordance with rules established by the Committee.
■- - .- ■',!,"
... ■ , J ' ' ' • - - - I ■ ■ ' ' '
■ ' • . ARTICLE 16 J : ''l ■ "
The Clearing House will examine and determine oh weekly'basis the net position of each Bank in the multilateral clearing arrangement. The result of this examination should be communicated immediately and by the quickest possible means to all the Banks.
"..'A-': ARTICLE 17 ;.>. ^-' kT:: 'VL
At the end of each calendar month, the Clearing House will advise by telex or cable, each Bank of its net position with the other Banks taken collectively and request each net debtor to make payments the indicated net creditor Bank'or Banks the amount specified in any convertible currency mutually agreed upon; ■ '" < -1- " >•'"'■ - . ' •'• - ■ - -
■:. 2.1 -.
ARTICLE 18
-, , ;. ..The debtor Bank will effect the payment referred, to in Article 17 in full to the creditor;Bank or Banks in accordance with.the directives of the Clearing House. The payment shall be effected within five working days of the date of receipt of each'directive and the debtor Bank will advise the Clearing House accordingly. The creditor Bank or Banks will also immediately advise the Clearing House of the. ,date_ of,receipt of payment..,, . - ..*.. ■■.- . ,. ;, .- t . -,' ; ;> ' - • . . ,..i ' •
...'.-ARTICLE-'19.- ■■- .Ci-f-'i ';■':.. * ,. '.'■./" . :
If at any time a Bank exceedsits allocated debit line, it shall be called upon by the Clearing House to effect immediate payment of the excess:amount to the indicated,creditor Bank or, Banks. in; any;, convertible currency mutually agreed upon. '.„.,; .^j,,-1;^.
Si'[ v :;-ARTICLE. 20 './/'-i''-l-.;.-f.'' l^'.^;[-\''
Notwithstanding the provisions-of Article 19, the debtor Bank may, with the consent of the creditor Bank or Banks, defer payment until the,.end of the settlement period when payment will be effected in
full. "[" ^! ';"*."'■.... .". ,. . ;-. ...' ■ ' [\' " ... . -
In this case, the debtor Bank shall pay interest on the amount referred to in Article 19 for the period of deferment at a market-
related rate determined by the Committee on the basis of prevailing rates .in, international money market3. (- .,
CHAPTER IV
PROVISIONS IN CASE OF DEFAULT ARTICLE 21
[::i; .A debtor Bank which, at the end of the settlemen.t period, fails.
.to-.comply with the provisions of Article. 18 will be denied further credit facilities and voting rights with immediate effect but will .be. obliged, to ■;
continue to channel its receipts from exports and other transactions within the West African Sub-region through the Clearing House.
22/...
- 22 -
ARTICLE 22
;.:;;■-. ' :A debtor Bank*who fails to comply with the provisions of Articles 19 and 20 will be subjected to sanctions applicable to a debtor Bank as provided in Article 21^ ■ i . . ;" . -;-
ARTICLE 23
Where a debtor Bank fails to meet its obligation under Articles 18 and 19 and where the Committee after taking appropriate action in accordance with Articles 21 and 22 fails to secure payment from the debtor Bank of the amounts in question, any such debt shall be borne by members in proportion to the value of their credit line.
-■■■-.. • CHAPTER V :' • - - - ■ ■• ■■.•■■■■
MANAGEMENT AND ADMINISTRATION ARTICLE 24
The implementation of this Agreement will be undertaken by the following organs, namely -
: " 'j ' .. • •.':■-,•-••.■■ : ii ■ ■ ■ ' ' :.-■
I. The Committee of the Exchange and Clearing System II. The Clearing House.
ARTICLE 25 : !
The Committee of the Exchange and Clearing System will be composed of the Governors of each member Bank. Each Governor shall appoint no more than 3 alternates of whom one will represent him in the Committee in his absence. , • : ' • •''' •
: ARTICLE . 26 ■ '
The Committee shall have the following powers :- I. To determine the location of the Clearing House ;
II. To determine the list of transactions to be excluded from the Clearing Arrangement ;
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- 23 -
III. To determine from time to time the method of
. calculating and size of the debit or credit line of each Bank ;
IV. To determine the procedures for achieving the aims and objectives of the Agreement ;
V. To appoint and discharge the Executive Secretary ;
VI. To appoint a Bub-Committee to meet at least quarterly
;; .,; ,.-to supervise the working of the:Clearing House ; . . VQ., To approve the rules and regulations Gf.tjie.ppmmittee.
and the Clearing House ;
VIII. To determine the interest rate to be charged on deferred payments ;
IX. To approve the budget and accounts of the Clearing House ;
X. To determine the par value of the West African Unit
of Accounts j ...
XI. To establish the rules governing payments under this Agreement and draw a list of convertible currencies mutually agreed upon ;
XII. To interprete the budget and accounts of the
Clearing House ; .
XIII. To take any action necessary for achieving the aims
. of the Agreement.; ....•■...
XIV. To submit an annual report and auciited accounts within three months after the end of the year to the West African Sub-regional Committee of the Association of African Central Banks.
24/...
- 24 --
ARTICLE -, 27
Each year the Committee .will :elect a member to be Chairman.
, The meetings of the.Committee will be governed by;the>.,
following rules1:- _ ■',, -_ -r, v;1 ^>y.f:i-;,:: . . .'■ - J---: &! -..*£«'■ w ■_<; ^
.1. -There willbe an ordinary, meeting of the-Committee
[li ;
II. Extraordinary meetings may be summonedjDy .the , _, . ,iv:tf;r Chairman at the request of any member or of the■■■■■-. .
> ,.;( . f , . Executive Secretary,; .iJir....:. ,,-• l( r.-joqe-n-i v ■:."''
III, The Committee will adopt its resolutions by
majority votes from the members, with the exception of resolutions regarding*Article 26, paragraphs 1, 3, 5, 6, 7, 8, 10, "Ii;-amri2, and the amendments to
£; the Agreement when unanimity will berrequired:; ,
IV, During the meetings of the Committee the Executive Secretary will take part in discussion but not in voting,
"'-•-." ;.,.- .- i..-r.::- .-^ARTICLE-,,28 . ■ , :.j P,,»ixa _-riT The co-ordination, .execution and supervision of-the-activltles . and co-operations of-the. Clearing House; will be the responsibility of the:
Executive Secretary. ,■.-,-;.,'jujiv ..n.-i*---^ . ■...•: ylnu'i /iw'.w'-'i ..
ARTICLE;; 29/ t; ,
The cost of operating,the Clearing House will be shared by members in proportion to the total value of the cleared transactions.-Aii j
ARTICLEr-30
,--^ The Committeei, will, apppintr an .Audits Commission which will audit the transactions and accounts^cfttie. Clearinghouse^on,an annual ^.
basis and submit a report to the Committee.
25/.
- 25 -
CHAPTER VI
•"•■' ""M ■-'•-■'■■ ' ARTICLE 31
Any"Bank which decides to withdraw from this Agreement should notify in writing the other Banks, and the Clearing House.
The withdrawal will'take effect 30 days after the date of receipt of notification by the Clearing House. The Clearing House will in the meantime determine the net position of the withdrawing Bank and advise it and the other Banks'accordingly. * ; ■ '; -"*-' -:
The corresponding net positions will be settledin accordance with the terms and conditions laid down in Articles 18, 19, and 23 of this Agreements J ■-■■ -1 - ■" ■'' "r- ' ■ "■ ■ ■■■■-■■ -■:■' . :
r i ■ ' J ' ARTICLE -32 Sl ''"■'
In case' of dissolution of the Clearing Arrangement; the Committee will decide on the terms and conditions of dissolution.
-- ■; x ■■ ■ . ■ ■■■'.■■ - . .'. , ('■■ -'■ I . *"1
•:'■■ ■ '• ARTICLE 33 ■ ^: ""*
The Banks in whose countries there are exchange control and other restrictive practices will use their best endeavours to facilitate the adoption of measures necessary for the functioning of the Agreement.
Such measures should be notified to the Clearing House' arid other Banks who work closely to make this Agreement effective, ■' '■ ::"
ARTICLE 34
' Any amendment to the provisions of this Agreement will be
on the unanimous vote of members: -■ •-.: ^ ■ i ■ „ . ■
ARTICLE 36 :
This Agreement shall come into force after it has been ratified
by not less than five Central Banks in the West African Sub-rtegion.: ;
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APPENDIX 6
IMPLEMENTATION ARRANGEMENTS ON ADOPTION OF REPORT BYTHE CENTRAL BANK OF SIERRA LEONE
Under this item, I should like to suggest for the consideration of
the Committee, some detailed arrangement whereby the Report of the Study
Group (that is., the Guidelines and Articles of Agreement) could be given early and effective implementation after the adjournment of this meeting.This, of course, will involve a number of secretarial and
other actions. Those which, occur to me immediately are the following :
1. Finallzatlon of the Report - - ^ - ' -l
Although we have not had enough time to examine in detail the guidelines, it is my view that they should be issued together with the Articles of Agreement since they will- provide the necessary background
information in the subsequent consideration of the necessary Articles V:
by our respective Authorities, that is, our Banks, Governments, Legal - ' Authorities, Chambers of Commerce and other related institutions.
2- Consideration of the Report by our Authorities I should also like to suggest that copies of the final text be
forwarded to Governors as soon as possible after this Meeting, and
that they be requested to obtain: the necessary clearance from their respective Governments (this is, with particular reference to the Articles of Agreements) and report back to a body to be decided uponby this Meeting. v :■ ■ ■j ;t. ■■ ; , -.
3. Queries and/or Observations
The Body so appointed will deal with all queries and observations received from Governors, and provided there are no fundamental issues to be resolved, this Body will arrange for the legal drafting of the Articles of Agreement. On the completion of this exercise, it may still be necessary to forward copies of the legal text to Governors for final clearance.
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4. Establishment of the Clearing House
If it is intended to set the Clearing House against our next Meeting, then there are questions of
i ■ (a) deciding on the location
- (b); appointment of Governors and their alternates:, (c) appointment of Executive Secretary ...
: .; :•'- :(d) initial membership subscription (e) inauguration of the Clearing House
51 Implementation Body . . . .
: '; In the absence at present of easily accessible secretarial servlcesatthe full disposal of the Sub-regional Committee, I should
like to suggest that ..-.■■
(a) the Host Bank of the next Annual Meeting be ..- requested kindly to undertake the duty of
co-ordination along the foregoing lines, and >
(b) 'the E.C.A. be asked to undertake the le^a). Ml.
, : drafting of the Articles of Agreementr. . , -, .. •-, The above suggestions are submitted for the consideration of distinguished Governors.
C
- 28 -
■X'■■""■'"■' V:'.:''"^-;':i::;""S- ' APPENDDC 7 ^■■■.- ; '; ■
.'. STATEMENT ON INTERNATIONAL MONETARY STT-JJATIPN WITH ' 'SPECIALREFERENCET.OTHEIMPXJCATIONS'OF-THEOIL -'
. .CRISIS,- BY MK.A;S.C. JOHNSON, DEPUTY GOVERNOR *■
■,-/■■.:■! ■>..,■:.. BANK OF-SIERRA LEONE' ■"'"-'-■■: :• ■?-..-^o ■*..>■ .
MrY ^airmanvErtstinguiehed Colleagues, -■■ ■ ^V^if^y;; ^ :>' :~f" '- . ..■ :.,-'"n\ My .delegation was; presumptuous enough to stiggest the inclusion of
this item on the Agenda, net because we pretend to knew all about the implications of the oil crisis on the tot ernational Monetary situation, tn fact we realise that oiir friends from'Nigeria are in a;much'^etter position
to: deal with the/si&ject,: and we also feel thatthey^ would gtedTy. Save done'1
so, ifthey., were riot. on. the.other side of the fenced :-"^J:?.?*} --JH. ;$ -'' !rtf
2, . ■_ .; -rWe would:therefore like to assure our colleaguesrthat wei have '
taken the,initiative mainly fin- the' hope that an exchange of;;views on/the ' : subject twiU|enable us to focus attention on the common problems associated
with the1 current international monetary situation; arising from the crisis;
a£d atth'esame time to high-.light the urgent nee4 for greater and t''i: ' ini^asified-monetary and economic cor-operatlon.-.by the, member^ of 'ihe - * sub-region..; , :'-.-i-' ■:■.':■' / ,•;•.■ .- ••;■. .... - '.; SS'-i^A* ^ jl^*';'" ;;Viv .
- :.. " ' :':" '--\> ?.[*'• ■■. ' '<■ ' -,-" '.v;,''.'i.\.r''-'*v'-'1''"; -l'^' ■v.i-"-"i .'.
3, :; ;:""Mr. Chairman,:the last twelve months have witnessed perhaps the most serious economic crisis ia.-the West African Sub-region, as a '-
J;result of the culmination of a number of factors completely 'outside the> - •'
influence of.bur various Statea. The sharp drop in the level;-;and in soniecases the, complete absence, ,of rainfall in the sub-^regibn during the'r '
period intensified a trend that has-persisted over the last five years.1 As a result, drought conditions have-played havoc-with the human' and^other' ■ natural, respurces-of the sub-region to the extent that someparts havebeen .deciarediaisaBterarea6M.i\-All:-these:are.in-addition to the'1persistence of worljiwide inflation,-sonieieven refer to it:asa hyper inflation;- arid1'-1""
uncertainty in the foreign exchahgemarket due to the generaiTe^ime '-
of floating of,the world currencies. : .: ..;••. ■;*:<" .■.'•■! ■:>'■ . . ■ 4, , While the drought has to varying extent depleted thVmeagre •"
foreign exchange reserves of almost every state'in the.sub-region- "global'
inflation and floating exchange rates have severely eroded the purchasing^1 power of what is left and exposed our economies to the antics of speculators29/,
- 29 -
and the major powers. However, we had hoped that at least some of these developments would be temporary and short lived in view of the pending reform of the international monetary system currently under consideration
by the Cxanmittee of Twenty. Governors" of the International Monetary Fund.
But the press releases that have emerged after the last two meetings
of the Committee indicate that the reform of the international monetary system will be a gradual process evolving over a period of time. Some are now suggesting that the process may take up to fifteen years to complete.Thus there are hardly any grounds for optimism in this connection in the near future. As though these intolerable burdens on our various economies were not enough, we are now faced with a four-fold increase in the price of oil. ; : - .,, . : ■ ■' -■ - ... ■ ..;.-.-., ■ ■■ < , 5. - ■- v. it is widely accepted that the.increase in oil prices and its implication's would create enormous balance of payments problems for the oil importing countries, mostly the developing countries." At the same time, the oil producing countries would enjoy unprecedented surpluses in their; current account which would amount toan increase in world savings insofar as the receipts from oil exports were largely unspent. It has been estimated by the International Monetary Fund that"
the: oil exporting countries would earn a surplus on current account to the tune of U;S. $85 billion while the deterioration in the balance of payments of the oil importing countries would be to the same extent, Of which, the developing countries, as a whole, would record a ■ balance of payments deficit of about U.S. $15 billion.
j - ■,("•'■■ ■ ■ .
6. These projected deficits would have to be accepted, and ways and means found to finance them. Iu the searchfor the financing means, maximum co-operation would be required not only on the sub-regional or regional level, but also on the global level. Quite a few'proposals have been put forward to alleviate the burden. For example, the Managing Director of the International Monetary Fund has proposed the creation of a special credit facility in the Fund, to be supported by normal Fund resources, in addition to loans from both the oil producing countries and those developed countries receiving substantial capital inflows. This proposal is in the opinion of my delegation a welcome one and we look forward to its early and effective implementation.
7. Another proposal put forward by the Shar of Iran is that
wealthy oil producing countries should create "some sort of international fund or bank" to provide development finance in developing countries.
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