EAC Monetary Union signing due next week

The EAC Heads of State Summit, slated for later this month in Kampala, Uganda, is expected to discuss and possibly seal the regional bloc’s Monitory Union Protocol.The protocol, once given the green light, will pave way for a process that would lead to adoption of a single currency across the five partner states; Burundi, Kenya, Uganda, Tanzania and Rwanda. Speaking to The New Times, on Monday, the Permanent Secretary in the Ministry of EAC Affairs, Innocent Safari, said the document on the protocol would first be scrutinised and approved by the Council of Ministers.The document was endorsed by ministers of justice and attorneys general of the member states, he said.Safari said the Council of Ministers will convene on November 28 before the Summit two days later.Third milestoneIf endorsed by the presidents, the East African Community Monetary Union will be the third pillar of the bloc to be signed after the Customs Union, signed in 2005, and the Common Market Protocol that was assented to in 2010.However, both the Customs Union and Common Market protocols are yet to reach full implementation, with authorities saying “they remain work in progress.”The use of a single currency is seen as a key ingredient in deepening the integration process, especially in trade, because it will eliminate exchange rates.Companies within the bloc would also easily compare prices with their competitors, which could, in turn, encourage competition and lower commodity prices.“Most of Rwanda’s cross-border trade is done in US dollars. If we were to have a single currency, traders would use it instead of the dollar, thus helping in reducing currency deficits governments usually have,” Lawson Naibo, the chief operations officer of Bank of Kigali, said in an interview on Monday.Naibo explained how the monetary union would allow the EAC member states’ currencies to carry out transactions in any partner states.“If, for instance, I wanted to buy a car from Kenya, under the Monetary Union, I would be able to send my francs to Kenya and buy that car without having to go through the burden of converting it into US dollars. Anyone would be able to pay for goods and services using their country’s currency as long as it’s an EAC partner state,” he said.Work in progressHowever, even if the presidents sign the document, it does not mean that the single currency will immediately be operational.Experts say it might take at least 10 years since it requires the setting up of institutions like the East African Central Bank to regulate it.Other requirements, according to the document, include ensuring that inflation among the partner states is maintained, at least at single digit.Others bodies like regional statistics bureau and enforcing mechanism are also needed to help the implementation of the currency that will be used in a bloc with a population of 135.4 million people.Concerns raisedBut there are concerns about the use of a single currency centre on the loss of national sovereignty.Some even fear that the partner states may not be able to pull out of a national economic crisis or narrow the poverty gap without the ability to control their own currency and volume of exports.No disagreementsMeanwhile, officials moved to dispel media reports that there had been disagreement during the course of the negotiations, which could push the signing by the heads of state to next year.“I was surprised by the reports in the news that Rwanda was complaining; it’s not true negotiations are over and we have a common paper that will be approved by the Council,” said Dr Thomas Kigabo, who was leading the Rwandan team in the negotiations.He said that during the negotiations every country was tabling its own position where by deliberations were made by regional experts before they arrived at a consensus.Regional media reports had suggested that Rwanda and Kenya were complaining about the deletion and amendment of some of the articles in the draft protocol.

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EAC Monetary Union signing due next week