Nairobi, Thursday, November 21, 2029: In recent weeks, the COMESA Monetary Institute has scaled up capacity building initiatives targeted mainly at staff of Central banks in Member States. The main objective of these initiatives is to improve macroeconomic management and financial stability in the region with the aim of enhancing the COMESA Monetary Integration Programme.
Two of the forums involved validation of ‘Users Guides’. The first to be validated was on “Analyzing Banking System Interconnectedness and Systemic Risk”. This workshop was conducted from 7 to 11 October 2019 in Kenya.
The guide will be an important tool for analyzing banking system interconnectedness which is important in understanding direct exposures between banks that can lead to contagion through domino effect and cause instability in the entire financial system.
In November 4 – 8, 2019, the User’s Guide on “Early Warning Models for Banks’ in Financial Distress: An Application of Multinomial Panel Data Analysis using STATA” was equally validated.
According to Mr. Ibrahim Zeidy, the Director of COMESA Monetary Institute, the workshops provided important feedback on the quality of the user’s guide as an important step of peer review.
“The user’s guide will supplement the existing off-site supervisory monitoring systems and on-site examinations with new statistical models to predict banks with an early stage of capital distress and banks’ rating downgrade or upgrade,” he said.
Meanwhile, studies conducted by Member Central Banks on “Empirical Analysis of the Effects of Key External Shocks on Selected Macroeconomic Indicators”, have been validated. This was done early last month.
The studies were commissioned by Governors of Central Banks on realization that external shocks external to an individual economy and beyond its control tended to have serious effects on most macroeconomic indicators of an individual country.
“Economies in the COMESA region has recently been vulnerable to external shocks, key among them being recession/slowdown in advanced/emerging economies, unfavourable terms of trade, decline in international commodity prices, and rise in international oil prices, among others,” Mr. Zeidy said.
He expressed confidence that the studies will significantly contribute to inform policy discussions on appropriate policies to mitigate external shocks.
Among the countries represented in the workshops were: Burundi, Djibouti, DR Congo, Egypt, Eswatini, Kenya, Madagascar, Malawi, Sudan, Uganda, Zambia, and Zimbabwe.