n AfricaGrowth Agenda - Credibility in monetary policy and dollarization in Sub-Sahara Africa

Volume 2009, Issue 10
  • ISSN : 1811-5187


It has been 52 years since Ghana obtained independence from Britain and 16 years since Namibia became the last country to gain independence from South Africa. With minor exceptions, the post-independence experience for most Africans with limited human capital plus those living in rural areas have been a slow but certain collapse in the standard of living relative to the immediate period before independence. There are various explanations for economic stagnation in Sub-Saharan Africa ranging from external factors (mainly colonialism and other conspiracies) and internal factors (persistent poor macroeconomic mismanagement and lack of independent institutions, to name a few) or a combination of the external and internal factors. This note focuses on the internal factors that contributed to the undermining of credibility of central bank monetary policy and fiscal policy in general. Zimbabwe is used as a reference case although the main factors that contribute to inflation are present in many African countries with South Africa, Botswana, Rwanda, and Ghana as exceptions.

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