Are you ready for this?

If the “brother leader” were to have had his way during his presidency of the AU, Africa would now be one country under the name of the Unites States of Africa with all the trappings of a modern state, including a common currency. Whether the world is ready for another country with the name of the USA is one concern. A more immediate concern is how the financial architecture of such a super-state would be regulated. Though this may seem like pie in the sky, it is a practical and real concern. You may not be aware but in August 2003, the Association of African Central Bank Governors announced that they would be working towards a common currency for Africa by 2021.

So looking around for a model of how such a system would work would mean looking at how the EU operates the euro. Prior to the euro being introduced there was a lengthy convergence period, during which (and most famously perhaps) the pound dropped out of the Exchange Rate Mechanism. More importantly though, the EU is a club of nations to which states need to apply for membership. A state will not be admitted to the EU if it does not meet the EU’s membership criteria, the underlying principle of which is that a member state must be a liberal democracy. One of the few membership criteria for the AU is that a member state should not be a colonial body — hardly the stuff to provide a common denominator for future political and economic co-operation.

Putting the virtues of liberal democracy to one side, the point to be taken from the EU experience is that if member states are going to co-operate then it means that all member states need to be of the same political type. For that reason, Spain and Portugal were only admitted to the EU once they had ceased being dictatorships. When one looks at the structure of the AU, there is no common denominator of political structure that binds the members. Membership ranges from functioning liberal democracies, such as South Africa and Botswana, to the last absolute monarchies on the continent, Morocco and Swaziland. This makes holding member states accountable for an unlawful change in regime (such as a coup d’etat) well nigh impossible, since it is not in the interests of the entire membership to restore democracy in such a state.

The lack of political cohesiveness among the members is just one problem with the vision of a United States of Africa and a common currency. The second problem is highlighted by the current economic crisis in Greece. In essence the problem with Greece is that it has flouted the rules that regulate the euro. More precisely, while some members have a double-digit public deficit as a share of GDP, others have a stock of public debt more than 100% of GDP and some have debt-financing costs that are also more than 10% of GDP. In the case of Greece, all three “deal breakers” in terms of the euro.

In order to save Greece from its financial mess, both the EU and (reportedly) Germany are preparing to step in to give the Greek government a financial lifeline.

Let’s take this latest Greek tragedy and project it onto a situation where the rules of the “afro” (or whatever the currency will be called) have been flouted and a fellow African country is heading towards bankruptcy. Being the largest economy on the African continent (in essence we are to the AU what Germany is to the EU) we would probably be expected to provide an economic lifeline in such circumstances. The question is whether we would want to provide such an economic lifeline to a dictatorship and in essence prop up such a regime when the nature of the regime goes against our political grain. Though the recent example of Zimbabwe may lead some to conclude that we would, I would argue that in some respects Zimbabwe is a special case. We need to try and keep the Zimbabwean economy ticking over in order to avoid any more refugees spilling over into South Africa, Botswana, Mozambique and Zambia and thus destabilising the entire SADC region. Whether this policy has worked successfully is another debate. But would we want to keep the government of the Central African Republic going, for example, when it is not in our political interests to do so? Though EU member states have a political interest to ensure other EU member states stick to the rules, there is no such common political interest in the case of the AU.

So do we want a common African currency? If so, in the words of the 90s rap group Snap, are you ready for this?