East Africa may adopt single currency this year, says PS
By JOSHUA MASINDE
Posted Saturday, January 14 2012 at 16:53
The East African Community could have a single currency by the end of the year if all goes according to plan, according to a senior Kenyan official.
David Nalo, permanent secretary in the ministry of the East African Community, says everything is being done to meet the deadline of putting in place a common currency protocol.
“We are mandated to deliver the East African Common currency by the end of the year. The East African dollar or shilling, if I may call it, is set to eliminate the high costs of transactions across the region.
“We are currently dealing with many currencies that make business very difficult and expensive,” Mr Nalo told Sunday Nation by telephone.
President Kibaki, who holds the rotating chair of the EAC Summit this year, has the delicate task of steering the bloc towards the common currency regime as well as accepting or rejecting the bids of Sudan and South Sudan to join the EAC.
The petitions by the two states will be considered in April at a special head of states forum. Only worry
“The only worry is whether the summit will deliver the common currency before the end of the year. It may go beyond the election period in Kenya,” risk consultant Kariithi Murimi said.
Whether the deadline for putting the common currency in place is met, prospective members like South Sudan might have to wait a little longer before they begin to enjoy the benefits and the challenges inherent in a common currency regime.
The East African Community Summit is also working towards a common central bank and securities exchange, but the biggest challenge now is the harmonisation of the data of individual countries to pave way for such changes.
The EAC is not in unfamiliar territory in pursuing a common currency as the eurozone provides a ready example of the European Union’s experience with the euro since its inception in January 1999.
A team of 20 members from the EAC is visiting three of the 27 EU member states to study the economic and monetary operations of the 17-member eurozone.
The EAC Secretariat in Arusha said in a statement that the delegates, who left on Friday, are scheduled to visit Brussels, Luxembourg, Frankfurt and Berlin.
Already, the EAC high-level task force has negotiated 49 articles, more than half of the those to be discussed in line with the monetary union protocol.
According to East African Community Director of Economic Affairs Richard Sindiga, a main challenge now is the negotiating and agreeing on the environment required for the monetary union to be in place.
“What is also needed is a legal framework defining what currency to use and how it will be used. We are also yet to discuss what role individual country central banks will play,” he said.
The single currency is expected to change the region’s economic terrain and alter the dreams of approximately 130,000 million people in the region.
Although Kenya, Tanzania and Uganda shared the East African shilling as the common currency for more than a decade after independence, they adopted their own currencies after the break-up in 1977.
Since its rebirth in 2000, the EAC has adopted the Customs Union and the Common Market protocol among its five members – Kenya, Uganda, Tanzania, Rwanda and Burundi – which have a Gross Domestic Product of over Sh6.89 trillion ($79.2 billion).
About Sh139 million ($1.6 million) was set aside in the 2011/12 budget by the member states to fast track the EAC monetary union protocol.
