MEFMI Hosts First Combined Research and Policy Discussion Seminar

MEFMI Hosts First Combined Research and Policy Discussion Seminar
MEFMI hosted its first combined research and policy discussion seminar from 22 to 26 July 2013 in Windhoek, Namibia.

This was done in response to one of the major recommendations of the regional retreat of Heads of research and policy units held in Swaziland in March 2012.  In the latter, participants recommended that in order for MEFMI to increase research capacity and analytical skills and to enable member states to significantly contribute to MEFMI publications, MEFMI needed to do the following:
• To look at possibilities of setting up a research review panel made of staff members from member states;
• To call for thematic research topics from member states and encourage them to undertake evidence based research/studies;
• To collaborate with AERC to beef up evidence based policy decision making; and
• To start publishing research papers and technical papers from member states.

In this regard, the seminar was designed as a combined event composed of two parts: discussion of evidence based technical/research papers during the first three days and country Monetary Frameworks discussion papers designed to share country experiences in the remaining days of the seminar.

The seminar was officially opened by Mr Ebson Uanguta, Deputy Governor of the Bank of Namibia. In his opening remarks, the deputy governor, underscored the fact that the complexity and the uniqueness of the MEFMI region only emphasize the need to develop a thorough grass-roots understanding of the economies, and a customized toolbox to deal with the multiple challenges faced by the member countries. He stressed that the process of improving the economy starts after the process of understanding it. He challenged participants not to rely on conventional prescriptions without fully understanding the symptoms of MEFMI countries’ economies; Thus the need for them to question the assumptions that they have based their respective frameworks on and make their policy directives as unique as the economies they target.
 
Some of the participants who attended the  first combined research and policy discussion seminar which was held in Windhoek, Namibia
Speaking at the same event which was attended by 22 senior policymakers in the macroeconomic field, researchers and policy analysts representing technical institutions in member states and dealing with monetary frameworks issues, Dr Ellias Ngalande, Executive Director of MEFMI explained the objective of the seminar. He stated that the seminar was designed in order to allow officials to share knowledge on research work on monetary policy frameworks in the MEFMI region and to stimulate discussion on key monetary policy effectiveness issues constituting one of the major preoccupations of policy makers in the MEFMI region.

Dr Ngalande also made an introductory presentation on the role of macroeconomic management programme in capacity development in the MEFMI region. This presentation put into perspective the objective of the seminar and to some extent shed light on the major reasons behind its undertaking.

The Seminar covered a wide range of research and technical papers relating to the way the Monetary Policy Framework is designed, run and monitored in the MEFMI region. The papers were trying to answer the following questions;
• Does existing economic theory provide lessons that are pertinent for designing effective monetary policy frameworks in MEFMI economies?
• What can be learnt from cross-country studies and from experiences of individual countries that have adopted different approaches?
• While country-specific circumstances and initial conditions matter a great deal in formulating suitable frameworks, are there clear general principles that can serve as a guide in this process?

Discussions ensuing from the questions allowed for an in-depth understanding of the process of setting monetary policy and the constraints under which it is formulated in MEFMI economies.  Case studies and technical papers also provided details of the evolution of monetary frameworks in MEFMI countries with varying degrees of central bank independence.

Delivery of the seminar was through presentations, questions and discussions. Presentations were delivered by the paper authors or country representatives followed by questions and discussions with a chair and at least one main discussant, the remainder of the audience being considered as secondary discussant.

Other presentations made were on the Choice of Monetary Policy Framework and Optimal Determination of Monetary Policy under a Common Monetary Area (CMA): the Case of Swaziland.  This was developed by Mr Patrick Ndzinisa of the Central Bank of Swaziland. Mr Ndzinisa explained how to choose a Monetary Framework and its optimal determination so as to ensure effectiveness of monetary policy while operating under a common monetary area. He elaborated that it is very challenging for Swaziland to come up with an independent monetary policy from the Southern African one as most of the policy rules are originated by the South African Reserve Bank. According to him, policymakers in the CMA play the “Followers ‘role” when it comes to Monetary Policy Frameworks effectiveness.

The presentation by Mr. Lerato James, who is a senior researcher, at the research department of the Bank of Botswana was entitled the Pass-through of World Oil Prices to Inflation in Botswana. The paper show-cased how policymakers in Botswana came to better understand how a change in world oil prices transmits into Botswana’s domestic prices (inflation) and what is the magnitude of the impact.

Mr. Austin Chiumia, MEFMI Candidate Fellow and senior researcher; in the research Department of the Reserve Bank of Malawi presented a paper on the nature of money demand function for Malawi and prosecuted the reserve money targeting framework that Malawi has been following. He indicated that the Money demand function in Malawi is there but with weak stability and cannot be relied on to design an effective monetary policy.

The Director of Research at the Bank of Botswana, Dr Kealeboga Masalila presented a paper entitled Excess liquidity and Monetary Policy Strategy in Botswana: An Overview of the Issues. He highlighted good practices currently in place in the Southern African middle income country. His presentation offered a comparative perspective to the situations in the countries represented in the seminar.

The presentation developed by a group of staff at MEFMI was made by Mr Jean Baptiste Havugimana, MEFMI Programme Officer.  The paper is entitled Instruments and Conditions for Efficient Monetary Policy Making in Support of Economic Growth: Case of MEFMI Countries. The paper presented as unfinished research paper looks at the role of monetary policy as a determinant of economic growth and attempts to examine the optimal monetary framework which can trigger tangible impact of monetary policy to economic growth in Africa. The overarching goal of the research is to run a cross country comparison of monetary frameworks in Africa in order to determine which economy and which monetary framework was effective in fostering economic growth.

Dr. Esman Nyamongo, Head of Modeling and Forecasting Division at the Central Bank of Kenya and Dr Kealeboga Masalila, Director of research department, Bank of Botswana, were the two regional experts who facilitated in the seminar as discussants.