Abstract
M.Comm.
The purpose of the dissertation was to determine the appropriateness of
forming a monetary union with a common currency within SACU. SACU
embodies five neighbouring countries, who are situated in the Southern
region of Africa. These countries include: South Africa, Botswana, Namibia,
Swaziland and Lesotho. The benefits and costs that might accrue to the
SACU region with the formation of a monetary union were highlighted in the
study. Past experiences of European and African monetary unions have
shown that countries who participate in a monetary union were able to pursue
credible and disciplined monetary policies. Fiscal and monetary variables
determined how appropriate it is to form a monetary union within SACU. The
study analysed the level of convergence of fiscal variables and the comovement
of monetary variables using statistical analysis and graphical
representations. The analysis was essential in assessing the readiness of the
SACU states for the eventual formation of a monetary union. Since countries
such as Lesotho, Swaziland and Namibia are small in terms of their
respective populations, sizes of their economies, per capita income in
comparison to their neighbours such as South Africa and Botswana, the study
highlights the fact that regional monetary integration is a useful way of
increasing their economic influence and participation in an increasingly
globalised world. The study concludes that the formation of a monetary union
with a common currency within SACU is feasible and provides some ideas for
further studies.