Regional preference within Africa?

• Africa's non-oil exports are concentrated in a few products, none of them important regional imports. • There is relatively little intra-African trade and the mismatch between African exports and imports cannot quickly change. • Moreover, intra-African trade is highly concentrated, geographically, with almost no trade between East and West Africa.

• This finding makes less compelling the arguments that regional trade can help overcome problems of small domestic markets.

• Giving preference to imports from other African countries risks making your own exports uncompetitive in the world market • In short, regional trade agreements seem to present Africa with a "lose-lose" situation.

Yeats, 1998

Exchange rate regimes: the shift from the centre Fischer 2001

Fischer, 2007

Rigid or inflexible regimes can be crisis-prone

Especially if capital market is open

If you want to peg your currency, you should have

(i) low capital mobility; (ii) (iii) (iv) (v) (vi) (vii) a high share of trade with the country to which it is pegged; the shocks it faces are similar to those facing the country to which it pegs; it already relies extensively on its partners' currency; fiscal policy is flexible and sustainable; its labor markets are flexible; it has high international reserves. (Mussa et a. 2000)