- The proposed delay is a weakening indictment on the members’ commitment to attain EAMU, a key pillar of integration.
- This has left the region’s journey to full integration looking longer than ever, and exposed the bureaucratic delays.
When the East African Monetary Union Protocol was signed on November 2013, the East African Community population was upbeat about the imminent arrival of a new currency.
The EAMU Protocol laid groundwork and timeline for a monetary union within 10 years and allowed EAC partner states to progressively collapse their currencies into a single currency in the community.
As stipulated in the protocol, the convergence of the currencies of all the seven EAC partner states into a single currency was to take a maximum of 10 years, which means the regional bloc was to have a common currency by 2024.
The deadline, however, may not be met as it turns out that all the member states — Burundi, Kenya, Uganda, Tanzania, Rwanda and South Sudan — have not fully implemented other protocols that are key to the rolling out of the common currency thus precipitating the delay.
A task force that was formed to look into the matter and make recommendations made a proposal to delay the implementation of the East African Monetary Union until 2031 from the initial date of 2024, saying the deadline is too soon considering that members have not met all requirements.
The EAC secretary general Dr Peter Mathuki, however, made an assurance in January that the single currency for the regional bloc could be as early as 2027.
The EAMU is the third pillar of the EAC, others being the Customs Union and the Common Markets Protocol. In the run-up to achieving a single currency, the member countries were supposed to have harmonised their monetary and fiscal policies, as well as their financial, payment and settlement systems.
Also geared for harmonisation were financial accounting and reporting practices, policies and standards for statistical information. Full attainment of the single currency will see the establishment of the East African Central Bank, which will be preceded by the East African Monetary Institute.
The proposed delay is a weakening indictment on the members’ commitment to attain EAMU, a key pillar of integration. This has left the region’s journey to full integration looking longer than ever, and exposed the bureaucratic delays that continue to haunt the dream of a common currency.
It is not amusing that member states, despite having ample time to work towards the transition to a new currency, have repeatedly failed to meet the deadline by failing to put in place the prerequisite infrastructure.
As EAC member countries continue to buy time through repeated changes in timelines for the delivery of a single currency, a move that was expected to enhance economic integration and increase the ease of movement of goods and services, businesses are hurting and losing a lot of money through conversion of currencies for transactions.
As recently reported by a regional newspaper, to make cross border transactions at the moment, local traders and individual travellers either have to convert their money into US dollars or change it from one national currency to the other depending on the number of countries involved.
This process on average erodes about 20 per cent of the value of money, according to some estimates. The trickle down effect is that it is in turn slowing economic growth in the region and impacting negatively on the cost of goods and services, and the cost of doing business.
As envisaged in the EAMU Protocol, the regions’ monetary union seeks to unite the fiscal and trade policies of Kenya, Tanzania, Uganda, Rwanda, Burundi and South Sudan allowing citizens to trade and interact freely without undue hindrance. This would be achieved through the adoption of the East African shilling as the official currency for the bloc.
It cannot be denied that the continued shifting of dates for the attainment of a single currency is counterproductive and a blight on the progress the community has made over the years.
There is no convincing reason as to the cause of the delay except the lack of commitment on the side of the member states to implement the stated agreements in order to allow for a smooth transition to a new currency.
The delay can be attributed to the lack of political will from the individual member states.
I, therefore, implore the Summit of the EAC Heads of States — it being the top decision making organ of the union — to make the bold step and ensure timely implementation of all the protocols to pave the way for the introduction of the long awaited single currency.
The member states must view this from the perspective that a common monetary union will be beneficial to all the EAC citizens. Businesses will thrive, cross border movements will be less costly and general improvement in the standards of living among a coterie of other benefits.
Further delays and non-commitment to the EAC spirit will prove too costly in the long run. We have no time on our side. Let us put aside the differences and work towards achieving the dream of one people, one destiny.
MDG party leader and Ugenya MP