EALA MPs call for usage of local currencies across EAC

Mnyaa Habib Mohamed is still inconvenienced by the same challenge he faced three years ago: he cannot buy or pay for goods and services using local currencies in the East African Community (EAC) member countries. This MP from Tanzania is a member of the East African legislative Assembly (EALA) – the Parliament of the EAC. Tanzania is one of the seven EAC Member States, along with Burundi, Democratic Republic of Congo, Kenya, Rwanda, South Sudan, and Uganda. He shared his frustration on Wednesday, November 2, in Kigali, during an EALA session that was debating on the Report of its Committee on Legal, Rules and Privileges on the East African Community Surveillance, Compliance and Enforcement Commission Bill, 2022. This is one of the four institutions expected to carry out much of the preparatory work for the creation of the EAC Monetary Union. According to the Road Map adopted by the Council for the Establishment of the EAC Monetary Union, this Commission was supposed to be established by 2018. The other three institutions are the East African Monetary Institute (EAMI), the EAC Financial Services Commission; and the EAC Statistics Commission. Mohamed is one of the many EAC citizens who are suffering the effects of the delayed implementation of the region’s preparatory policies prior to achieving a monetary union by 2024. “Three years ago, I was at Nairobi Airport, and I wanted to change South Sudan pounds; it was rejected in forex bureaus, ... I did not succeed,” he said. A similar case, he said, occurred last month when he was at Nairobi Airport. “I wanted to change Burundian francs to Kenyan shillings but it was not possible in all forex bureaus – I went to three at the Airport,” he revealed. Also, he said that this week, he was unable to purchase products in Rwanda using Tanzanian shillings. “Two days ago, here in Rwanda, I went to the supermarket, I took my Tanzanian shilling visa [card]; after buying a lot of things [collecting a lot of things to buy], it was rejected – it didn’t function I mean,” he said. “But when I took my USD visa, then it worked, and I managed to buy all these things,” he added. One would wonder what would happen in case he did not have the US Dollar-based digital payment tool. “It is annoying that to date, what has been mentioned in the article five [of the EAC Monetary Union Protocol], for example, harmonise and coordinate their monetary and exchange rate policies; this has not been done at all,” he said, pointing out that they [EAC member countries] are lagging behind in terms of setting up the envisaged monetary union. Need for a review of some requirements The Protocol provides that, also as a prerequisite to the monetary union, the EAC Partner States should attain the macroeconomic convergence criteria specified in its Article 6 (2) and maintain the criteria for at least three consecutive years. Those conditions that the Partner States undertake to attain include a ceiling on headline inflation overall (inflation considering the rise in prices of all the economy's commodities, goods, and services) of 8 per cent; a ceiling on fiscal deficit, including grants of 3 per cent of Gross Domestic Product (GDP); a ceiling on gross public debt of 50 per cent of GDP in Net Present Value terms; and a [foreign] reserve cover of 4.5 months of imports. MP Akol Rose Okullu from Uganda said that there is a need to review the convergence criteria, “because now as we speak, when you look at the requirements, I doubt that there is any country that satisfies the requirements for say, the debt equity ratio, the GDP per capita, the fiscal policies and others.” “So, this is a red flag, definitely, that if you want to achieve the monetary union, and basing it on the convergence criteria as well as required by the Protocol, then it’s high time that the [EAC] Council [of Ministers] sits and sees how to make sure that the convergence criteria that we have now is reviewed in order to ensure that this Protocol is achieved,” she commented.

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EALA MPs call for usage of local currencies across EAC