Revised East African single currency schedule upsets lawmakers

What you need to know:

  • The East African Community (EAC) Monetary Union Protocol, which was signed on November 30, 2013, aims to converge the currencies of the partner states into a single currency

Arusha. Members of the East African Legislative Assembly (Eala) have criticised revised dates for the single currency economy in the region.

They said frequent changes in time lines and delays were not only counterproductive but had also put the commitment of some regional leaders in question.

Abdullah Hasnu Makame, an MP from Tanzania, wondered why dates for attaining full monetary union kept on changing without justifiable reasons.

“That the monetary union would be up and running by 2024... Then the Council (of Ministers) came and said we are going to extend the delivery time,” he told the just-ended House sitting in Bujumbura.

The East African Community (EAC) Monetary Union Protocol, which was signed on November 30, 2013, aims to converge the currencies of the partner states into a single currency.

The convergence of the currencies of all seven EAC partner states into a single currency was to take 10 years, which means the regional bloc was to have a common currency by 2024.

In the run-up to achieving a single currency, the member countries have to harmonise their monetary and fiscal policies, as well as their financial, payment, and settlement systems.

Also geared for harmonization are 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 (EAMI).

However, Mr Makame said repeated delays in the implementation of the protocol were impacting the expected goodies, like eased transactions at the borders.

Achieving the monetary union, he explained, would ease transactions, including payments among EAC citizens.

This, he told the House, would eliminate currency exchange challenges “as a single currency would be used across the region.”

The Tanzanian lawmaker said he and others were yet to be convinced as to why the EAC Council of Ministers has pushed the delivery time (for the single currency) to 2031.

Ms Fatuma Ndangiza (Rwanda) stated that she was not surprised why the EAC single currency project kept being pushed forward.

She said achieving the monetary union requires that the other two pillars of integration, namely the customs union and the common market protocols, be “fully implemented and complied with by all EAC partner states.”

She called for the establishment of the required institutions, including the EAM, the Statistics Bureau, and other institutions, to expedite the support of the EAC single currency.

According to a dispatch to The Citizen, the debate at the Eala session in the Burundi capital later extended to the trading regimes in the region.

Contributing to the debate, Mr Makame underscored the importance of establishing the EAC trade remedies committee to address a raft of challenges.

The proposed committee would, among others, pave the way for the implementation of Article 24 of the Customs Union Protocol that came into legal force in 2005.

A renewed debate on the stalled EAC monetary union project followed a recent communiqué issued by the Monetary Affairs Committee (MAC) of the EAC member states.

It said the partner states’ central banks had made significant strides towards the establishment of key institutions that will operate under the monetary union.

However, the Committee noted that a lot of work still needs to be done in the area of cross-border payment systems.

The member states must also agree to continue rolling out interoperability initiatives at the national level and enhance the East African Payment System (EAPS).

Other stakeholders at the continental (African) level will also have to be engaged in the further integration of cross-border payment systems.