Implementation of the East African Community single currency will be a “hard task” unless bottlenecks existing among other signed EAC protocols are cleared, experts have said.The leaders of the five EAC partner states on Saturday signed the monetary union kicking off plans to have a common currency
By Patrick Jaramogi
Implementation of the East African Community single currency will be a “hard task” unless bottlenecks existing among other signed EAC protocols are cleared, experts have said.
The leaders of the five EAC partner states on Saturday signed the monetary union kicking off plans to have a common currency in a decade.
Presidents Museveni (Uganda), Kenya’s Uhuru Kenyatta, Burundi’s Pierre Nkurunziza, Tanzania’s Jakaya Kikwete and Rwanda’s Paul Kagame signed the union protocol at Speke Resort Munyonyo.
But much as the move is expected to boost regional trade within the EAC block, experts have warned that other treaties signed should be implemented first and respected by all partner states.
The move aims at having the partner states harmonizing their monetary and fiscal policies that will pave way for the creation of East African Central Bank.
Rashid Kibowa the Commissioner Economic Affairs ministry of East African Community Affairs noted that efforts must be made to remove all Non Tariff barriers to trade if the monetary union is to materialize.
Speaking at the Civil Society- EAC regional pre-summit meeting organized by the Uganda National NGO Forum, Kibowa said, “the partner states must remove key impediments to thriving production and integration.”
He highlighted the poorly integrated poor market, minimal liberalization, the slow pace of the capital markets under the integration and very slow service sector liberalization as key issues that need addressing. “The border operations are still problematic. We need to improve this before we can go ahead to implement the single currency,” he said.
Dr. Jacklyn Makaaru an economics expert noted that there cannot be a monetary union without increased production. “Most of the goods on the EAC market is imported from outside. Let us first invest in production so that we know that Uganda produces matooke while Kenya produces milk that is sold in the region. Before this is done, we cannot think of a single currency for trading in EAC,” said Makaaru.
Uganda NGO Forum executive director Richard Ssewakiryanga said many good initiatives are hatched in Uganda, assembled in Tanzania and implemented in Rwanda. “The partner states must harmonise their land policies. Tanzania is greatly worried about their land. These issues that create fear among partner states must be addressed first,” he said.
Richard Sezibera the EAC Secretary General said the region is poised to enter an accelerated phase of integration with the signing and entry into force of the Monetary Union.
The protocol provides that member states maintain an inflation rate ceiling of 8 percent. Countries will be expected to sustain their debt to GDP ratio at not more than half, and a tax to GDP ratio of 25 percent to qualify to join the Monetary Union.
Go slow on monetary Union- experts