EAC States meet to review monetary union progress

By John Oyuke

Stakeholders drawn from the East African Community (EAC) financial sector are meeting to review developments in region’s financial markets as the deadline nears for the much-hyped region’s single currency.

EAC secretariat says the meeting in Arusha that ends Tuesday February 28, is discussing the single currency expected to be in place June 2012.

"They will discuss sustaining economic growth in the region, developments in the eurozone and lessons for the EAC as it negotiates a protocol for a monetary union," the secretariat said in a statement of the meeting being held jointly with International Monetary Fund (IMF).

EAC countries — Kenya, Tanzania, Uganda, Rwanda and Burundi — have been discussing a single currency plan covering monetary policy harmonisation and financial sector integration.

However, Rwanda has indicated it might not be part of the region’s single currency plan.

Recently, the permanent secretary in Tanzania’s ministry of East Africa Cooperation, Dr Stergomena Tax Bamwenda, hinted that the deadline for the East African countries to adopt a monetary union set for this year, might be extended - signaling the partner states unwillingness to embrace the union in earnest.

Bamwenda told a Tanzania daily that sticking issues such as budgets, inflation rate, foreign exchange reserves, government debts and exchange rates among member countries must be observed before they commit to a single currency arrangement.

She noted that the ongoing negotiations on the monetary union would consider all factors, and if not met, the countries will not embrace a single currency this year as planned.

"We are still in the process. We can’t rush to introduce monetary union until those criterion are met; even as the deadline approaches, we will not rush," she insisted.

She said EAC was also learning from other regional blocs like the eurozone on intricacies of the monetary union, before ratifying the agreement.

The two-day conference comes amid a growing regional trade crisis. Most of the region’s border posts are experiencing cargo backlogs, amid graft allegations.

The EAC Secretary General, Dr Richard Sezibera, says the conference would offer a unique opportunity to discuss how best the region should work to achieve its vision of promoting a secure, competitive and prosperous East Africa.

The conference themed The East African Community after 10 Years: Deepening EAC Integration also offers a platform to about 100 regional and international experts and policy makers to discuss EAC’s accomplishments since 2001.

Regional block

Speaking late last year, Sezibera expressed confidence that community would introduce a single currency by June this year, making it the second regional bloc to adopt single currency after the European Union.

The bloc, he said, was halfway through the negotiation process, adding that the high level task force was doing all it could to accelerate the adoption of a monetary union.

"We are halfway in the negotiations for the protocol and the talks on the remaining items will be accelerated in the first half of this year," Sezibera said.