also true that in itself globalization will not benefit those countries that are not prepared to take advantage of the new system. in order to benefit from a globalised economy, i do recognize three issues that are of critical importance. first, a country needs to ensure that it has the necessary human skills capable of competing effectively within the world economy. second, a country would need to have an institutional arrangement that conforms to international standards. examples here are that your institutions must practice good governance ; you must have an effective accounting regime ; and you must have clear demarcation of functions and responsibilities among your institutions. the third issue i believe is important is an effective legal framework, where businesses and individuals alike are certain that their legal contracts are enforceable in a timely manner. in our region, the increasing interest and momentum for the creation of a monetary union seems to revolve around two main considerations. the first is that the establishment of a monetary union in combination with free trade agreements is increasingly being seen as part of a strategic push to integrate the region. in this regard, a monetary union is seen as a way of reinforcing regional cohesion and demonstrating a commitment to regional solidarity. indeed, the harmonization and unification of monetary policy represents the deepest form of economic and financial integration. the second consideration for the formation of a monetary union is the desire to counteract perceived economic and political weakness which dates back to the period of colonial rules by putting in place regional institutions, of which a monetary union and common currency would be strong symbols. it would also appear that the launching of the european monetary union has influenced this process. a strong argument and motivation for a monetary union is that it brings a number of benefits. the most often cited benefits are the increased intra trade, price stability, increased aggregate investment, and the elimination of the exchange rate risk. it is argued that the elimination of the exchange rate risk would allow for increased capital inflow and regional investment opportunities resulting in welfare gains and growth. it also reduces transaction cost within the region incurred when changing one currency to another. besides increased intra - trade, economic theory and experience also suggest that a single regional currency is expected to have a more stable internal and external value. therefore, the benefits of price stability and monetary policy credibility are more likely to be realized in a monetary union. this is especially true if the regional monetary authority is autonomous in carrying out its functions and where its primary objective is price stability. it is also suggested that a monetary union would improve macro

tom alweendo : prospects for a monetary union in the southern african development community ( sadc ) address by mr tom alweendo, governor of the bank of namibia, at the bank of namibia ’ s annual governor ’ s address, windhoek, 18 november 2004. * * * invited guests, ladies and gentlemen : i am happy to welcome you once again at our annual event, where over the last five years i have shared my views on a number of issues of economic nature. this evening, i am going to share with you my views on the prospects for a monetary union in the southern african development community ( sadc ). this topic is by no means new and it has been discussed by various speakers on various occasions. however, because of its importance it is worth repeating and hopefully we will start building a consensus around the issue. the issue of monetary integration that is meant to ultimately lead to a monetary union on the african continent is being addressed at two levels. the first level of discussion is the continent - wide, where under the african union the continent shall establish a common monetary policy and therefore a common central bank. the association of african central banks ( aacb ) has been requested by the african union to prepare the establishment of the african central bank and the time framework. the aacb has suggested a tentative work program that will see the african central bank being established by the year 2021. the second level of discussion with regard to monetary integration is taking place at regional level, where all five african regions are expected to work on regional monetary integration. in the southern african region, sadc is working on a program where we are going to establish a common central bank in the region by 2016 and a common currency by 2018. the year 2016 sounds far enough, but this is a mere twelve years from now. namibia ’ s position with regard to a sadc monetary union is further complicated by our membership to the cma. at the cma level, we have also started with preliminary discussions that more and more points at the establishment of a cma central bank ahead of the sadc central bank. an argument could be made that since all cma member countries are members of sadc, it will be better for namibia to concentrate on the sadc monetary union discussions. however, this will only be true if one was certain that the sadc discussions will go ahead as per the agreed timeframe. the concern here is that the cma is a de facto monetary union, except that the