Challenges and New Perspectives for Monetary Policy in Africa
The current global outlook of weak post-Covid recovery, geopolitical tensions, supply constraints, high inflation, tight macroeconomic policies, climate change, and persistent global uncertainty is presenting complex challenges for economies of the world. As the Russian-Ukraine conflict persist, it continues to exert dire macroeconomic shocks with significant economic consequences for Africa. For instance, global supply chains previously established were disrupted for many economies around the world leading to supply shortages and significant price increases. A recent IMF study showed that these concerns are severe for Africa where the component of food and tradable goods in the consumption basket is high, and weak monetary policy frameworks increase the risk of inflation expectations becoming unanchored (Andriantomanga, 2023). Brunnermeier (2023) argues that monetary policy conduct in Africa require a modified approach that is robust to sudden and unexpected changes in the macroeconomic scenario. Moreover, there is increasing pressure for central banks around the world to develop monetary policy responses to climate change. Arndt et al (2020) states that emerging and developing economies are likely to be affected by climate change more than advanced economies. African economies must therefore develop capacity to finance renewable energy investments, and assess climate risks and their effects on inflation, financial stability and growth. These risks and uncertainties raise complex challenges for modelers, forecasters, and policy makers. What are the appropriate monetary policy responses to these challenges and how can modelling and forecasting be forward-looking to respond early to global risks and uncertainties? These questions demand critical reflection of monetary policy frameworks, models and assumptions to find solutions that are relevant for Africa`s context. This state of affairs provides a unique context to rethink monetary policy for Africa.
In addition to these global pressures African countries are grappling several macroeconomic challenges at local level notably high inflation, tighter macroeconomic policies, energy supply shocks, elevated public debt levels, weak confidence, low investment levels, high unemployment, low economic growth and other structural issues. Furthermore, the interactions of fiscal and monetary policy in many African countries are often misaligned and yet the role of fiscal policy in supporting financial and economic stability could be vital. de Jager et al (2022) showed that although fiscal policy is not flexible enough to respond to sudden external shocks, sound fiscal policy is a crucial factor in increasing economic and financial resilience to these shocks. Experience from the Covid-19 crisis demonstrated how fiscal policy can be a significant driver of inflation (Soyres et al, 2022). Hooley et al (2022) also showed that fiscal dominance is widespread in sub-Saharan Africa and that it can contribute to inflation and macroeconomic instability. What are the challenges and opportunities for monetary-fiscal policy interaction for African economies?
The gravity of these concerns raise questions about how monetary policy may have to change going forward. Thus, this special issue aims to address these complexities surrounding monetary policy to find solutions, fresh perspectives and directions for monetary policy in Africa.
List of topic areas
We invite papers that cover topics including, but not limited to the following:
- Geopolitical risks and monetary policy
- Uncertainty and monetary policy forecasting
- Climate change and implications for monetary policy
- Climate risk and financial stability
- Monetary policy and renewable energy finance
- Weak post-covid recovery and monetary policy
- Supply chains disruption, imported inflation risks and monetary policy
- Global financial conditions and monetary policy
- Structural issues and the role of monetary policy
- Fiscal dominance risks and monetary policy
- Fiscal and monetary policy interactions
- Monetary policy and public debt sustainability
- Monetary policy and household indebtedness
- Regional integration and monetary policy
- Financial stability, inclusive growth and monetary policy.
Submissions are made using ScholarOne Manuscripts. Author guidelines must be strictly followed.
Authors should select (from the drop-down menu) the special issue title at the appropriate step in the submission process, i.e. in response to “Please select the issue you are submitting to”. Submitted articles must not have been previously published, nor should they be under consideration for publication anywhere else, while under review for this journal.
Opening date for manuscripts submissions: 18/09/2023
Closing date for manuscripts submission: 30/04/2024
Andriantomanga Z, Bolhuis MA & Hakobyan S (2023). Global Supply Chain Disruptions: Challenges for Inflation and Monetary Policy in Sub-Saharan Africa. International Monetary Fund, Working Paper No. WP/23/39.
Arndt C, Loewald C, & Makrelov K (2020). Climate change and its implications for central banks in emerging and developing economies. South African Reserve Bank, Working Paper Series WP/20/04.
Brunnermeier MK (2023). Rethinking monetary policy in a changing world. Finance and Development. International Monetary Fund.
de Jager S, Loewald C, Makrelov, K & Sibande, X (2020). Leaning against the wind with fiscal and monetary policy. South African Reserve Bank, Working Paper Series WP/22/12.
de Soyres F, Santacreu, AM & Young H. (2022). "Fiscal policy and excess inflation during Covid-19: a cross-country view," FEDS Notes. Washington: Board of Governors of the Federal Reserve System, July 15, 2022.
Hooley, J, Nguyen L, Saito M, & Towfighian SN (2021). Fiscal dominance in sub-Saharan Africa Revisited. International Monetary Fund, Working Paper No. WP/2021/07.