NAN – The African Union (AU) Summit has approved the creation of an African Monetary Fund (AMF) with an initial capital of 22.64 billion dollars to promote economic development in Africa.
The AU Commissioner for Economic Affairs, Anthony Maruping, told newsmen in Malabo on Monday that the Fund would work to correct balances of payment positions across Africa.
He said that 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.”
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.”
The AU official said the Fund would have an authorized share capital denomination of 100 dollars per share with a callable share capital of 50 per cent of the authorized share capital, which is 11.32 dollars.
The paid up share capital would be at least 50 per cent of the callable share capital 5.66 billion dollars denominated in 100 dollars, 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 one billion dollars, followed by Nigeria at 7.94 per cent, translating into 899 million dollars in capital contributions.
Egypt, Africa’s third largest economy, was expected to subscribe for 6.12 per cent of the shares, contributing 693 million dollars, followed by Algeria, to be allocated 4.59 per cent of the shares at 520 million dollars.
Each country was expected to pay for its subscription at once or in four installments of 25 per cent of the amount and payment period would last for between the initial four years to eight years.
The first payment is expected 60 days after the AMF treaty enters force.
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.
