Editorial: Central bank independence in Africa will be won in the bond market, not the statute book

Every few years an African central bank law is amended to strengthen independence, and every few years fiscal reality tests the amendment. The pattern is not hypocrisy; it is structure. Where domestic capital markets are shallow, the central bank is the lender of first resort to the state, whatever the statute says.

Ways-and-means advances, overdraft facilities, and the quiet accumulation of government paper on central bank balance sheets are the mechanisms. The cure is not more forceful legal language — it is deeper markets: pension reform that channels long-term savings into government securities, primary-dealer systems that make auctions competitive, and yield curves credible enough that a finance minister facing a funding gap sees the market, not the governor, as the path of least resistance.

The encouraging news is that this is happening. Domestic debt markets across the continent have deepened markedly in a decade, and the countries that went through domestic debt restructuring learned viscerally that captive central bank financing is not free money — it is deferred inflation, paid disproportionately by the poorest.

Donors and international institutions who care about central bank independence should fund the unglamorous plumbing: settlement systems, credit ratings for local issuers, market-making capital. The statute book has done its work. The order book is where independence is won.