Measuring the Statutory Independence of Sub-Saharan Africa Central Banks

Abstract

This study evaluated the degree of legal independence of 14 Sub- Saharan Africa central banks using the CWN (1992) approach. Central bank independence, i.e. freedom from political pressure in the conduct of monetary policy, is an attempt to overcome the inflationary bias inherent in the trade-off between inflation and unemployment reflected in the Phillips curve. Comprising, Angola, Botswana, Ethiopia, Ghana, Kenya, Namibia, Nigeria, Malawi, Mauritius, South Africa, Tanzania, Uganda, Zambia and Zimbabwe, the sample study produced interesting results. Namibia, for instance, scored the highest in terms of legal independence with Zimbabwe the lowest score. The results were then compared against CWN (1992) study. The initial results showed that in the majority of instances, there had been a marginal improvement in legal independence after 1990 and were confirmed by t-tests.

Keywords: Central bank independence, price stability, statutory independence,