By Dr. Anthony Kafumbe

THE objectives of the East African Community (EAC) are to develop policies aimed at widening and deepening cooperation among the partner states. The cooperation will be enhanced through the development of programmes in various fields for the mutual benefit of all, with a view to achieving economic, social and political integration.

Article 5(2) of the EAC Treaty (1999) enjoins partner states to establish among themselves a customs union, a common market, subsequently a monetary union and political federation.

In order to strengthen and regulate the industrial, commercial, infrastructural, cultural, social, political and other relations of the partner states, there shall be accelerated, harmonious and balanced development and the benefits shall be equitably shared.

Since July 7, 2000, when the EAC Treaty entered into force, noteworthy achievements have been registered including the signing of the Common Market Protocol by the EAC heads of state.

Nevertheless, the fact that Rwanda, Uganda, Burundi, Tanzania and Kenya presently constituting the EAC, are resolute to adopt a monetary union, is a rare opportunity Ugandans must exploit.

Simply put, monetary union means the conduct of a single monetary and exchange rate policy and the issue of a single currency throughout the area.
The objective of monetary unions is to establish among the participating countries, a zone of monetary and financial stability.

An established, monetary policy in all the EAC states will be indivisible. There will be only one exchange rate.
Furthermore, although the responsibility for economic policy will in all probability remain with individual states, the sustainability and smooth functioning of the monetary union require that Ugandaâ€™s economic policies remain consistent with the commonly agreed objective of monetary and financial stability.

The compromise is that replacing the Uganda shilling with a regional currency will affect every citizen and many aspects of the monetary economy.

Indeed, all accounting systems will adjust. All assets and liabilities denominated in the present currency will have to be converted into the new unit and for most people, a new culture regarding prices, pay and transactions will have to be nurtured. Some Ugandans will, no doubt, find these changes discomforting.

However, the benefits derived from embracing a monetary union, far outweigh the compromises.

These may be summed up as: A harmonious, balanced and sustainable development of economic activities. A sustainable and non-inflationary economic growth, intra-regional economic and financial integration and the efficient allocation of resources. It is widely acknowledged that the adoption of a single currency advances the integration of the financial sector and leads to better fiscal and monetary policy. This is crucial to attracting investors, resulting into economic growth and the creation of jobs that Ugandans urgently need.

The business community will realise that the introduction of a single currency lowers the cost of doing business.
It would be naive to assume, however, that the monetary union by itself will bring about the realisation of all the above benefits. Ugandans must, at the very least, participate in all EAC integration activities. Now with the Common Market, there will be free movement of goods, services, capital and persons.

The media should also continue giving EAC activities coverage to keep Ugandans and other East Africans informed as relevant developments unfold.

The writer is the principal legal officer,
EAC Secretariat

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