East African Community monetary union shows signs of progress

By JAMES ANYANZWA

East Africa moves closer to its goal of adopting a common currency with the regional heads of state expected to ratify the idea later this year. The East African Community (EAC) Secretary General Dr Richard Sezibera said the EAC Council of Ministers approved a draft East African Community monetary union (EAMU) protocol in July 2013 and the Summit of the EAC heads of state is expected to sign it in November.

“This year we shall be reaching an agreement in turning East Africa into a single customs union territory. We have just concluded negotiations for the establishment of a monetary union,” he said.

Sezibera was speaking during the Kenya Bankers Association (KBA)’s Annual Banking and Research Conference in Nairobi.

The East African Community consists of Kenya, Rwanda, Burundi, Uganda and Tanzania, with a total population of about 136 million.

Though the monetary union itself may not be actualised during this period, a consensus over the road map for its eventual implementation is widely seen as a huge stride forward.The monetary union would be implemented within a period of 10- years from the effective date of the ratification of its protocol.

Doing business

Dr Sezibera said once operational the monetary union would reduce the costs and risks of doing business across the national boundaries of the EAC Partner States.

“For example, when implementing the monetary union, we will remove the cost of having to transact in different currencies and the risk of adverse exchange rate movements for trade within East Africa,” he said. Sezibera pointed out that the EAC has so far made significant progress towards achieving the EAMU.

He said the monetary affairs committee (MAC) has made significant progress in building the foundation for the EAMU in the areas of monetary policy coordination, harmonisation and financial markets development.