DOI: 10.36347/sjebm.2020.v07i09.002

Pages: 293-298

While it is not rare to find sufficient literature and evidence on the roles and impact of monetary policy in industrialized economies in achieving macroeconomic objectives such as economic growth, employment and price stability among others; the evidence however from developing economies remain predominantly inconclusive and insufficient largely due to data challenges and structural rigidities within their financial setup and unlimited political interference in the implementation of monetary policy. This suggests that the success of monetary policy in any economy does not only depend to the choice of policy tool but also on other fundamentals such as the financial openness of the entire economy. In this study, we evaluated the efficacy of monetary policy in five (5) African countries from 1980 to 2019 since most of the existing studies are limited to analysis on individual countries. Using panel regression analysis and fixed effect model with data set from World Bank database after ensuring that all the variables are stationary (unit root test). We established the presence of a monetary transmission mechanism flowing from higher growth in broad money to higher rates of inflation through to higher rates of economic growth. Positive growth in broad money caused significant increase in economic growth but with inflationary pressure in these countries. We therefore call for sound and positive growth in broad money in these five (5) African countries to achieve a positive balance between economic growth and price stability. Given the relatively stable political and socioeconomic conditions prevailing in these countries, it is necessary for monetary policymakers to institute sound and prudent measure to create the right environment for monetary policy to succeed.