Rift emerges over EAC Monetary Union

Sharp differences have emerged over the timing for the introduction of a single currency for the East African Community economic region in the ongoing negotiations being held in Arusha, Tanzania.Economic experts and politicians seem unable to agree on a timeframe for the introduction of the envisaged single currency at the talks which are jointly organised by the World Trade Organisation and the EAC.International economists have advised that the Commuinty should take time to study all the intricacies involved in setting up a monetary union to avoid any future crisis that might arise, citing the ongoing Euro Zone currency difficulties as a case in point. “It’s not the right time for EAC to have a single currency. You need a lot of time; it’s not good to rush. There is a need to learn more especially what would be the incentives among the partner states and the penalties for discipline to those who will not fulfill their obligations,” said Prof. Paul Collier, an Economist at Oxford University, in exclusive interview with The New Times.He said that the region must first focus on instituting strict rules and regulations to avoid financial crisis that might in future hit the region.“Europe is suffering today because of breaking the fiscal deficit and balance of payment laws; an issue that the East African Community should avoid. It took Europe 44 year to negotiate and have a monetary Union and EAC wants to do it within few days, it’s wrong, they will regret it,” he said.After the implementation of the Customs Union and the Common Market, the Monetary Union is the next and third stage in the integration process of the EAC. The ultimate step will be the formation of a political federation. The debate comes as the EAC Summit of Heads of State has set a 2012 deadline for the envisaged Monetary Union. EAC Secretary General, Amb. Richard Sezibera has repeatedly said that the bloc is committed to having the Monetary Union Protocol agreed on within the set timeline.“The integration agenda is speedy by design, I am confident we can have the Monetary Union Protocol signed soon but am sure that implementation will take a longer time,” Dr. Sezibera said, responding to a recommendation by former German President Prof. Dr Koehler, on the need for a more relaxed timeframe before embarking on the next stage of integration process.Amb. Claver Gatete, the Governor of the National Bank of Rwanda, said that member countries are committed to have the Monetary Union using the experiences gained from other regions.“The Heads of State have committed themselves to have this Monetary Union; what is remaining is how to achieve it. What we need to know is that Europe is not East Africa; they have their own issues and for us we are here to get experience from other communities to have the Monetary Union in place,” he said in an interview.Bishop Dr Zac Niringiye, chairperson of National Governing Council (NGC), from Uganda, criticised the Prof. Collier’s submission, saying that Europe was failing to have a strong, single currency due to absence of technology. He said communities that have common single currency have developed rapidly.“It took Europe 44 year because it was before the internet and phone era, yet the world today is more globalised than ever before. America is powerful because of its massive population and use of single currency; China likewise. Today is the right time to have Monetary Union for our region to grow,” he said.Dr Niringiye, who also chairs the Centre for Constitutional Governance (CCG), said what was needed was political will from the region’s Heads of State and all the east African people to ensure proper formulation of a single currency.In an exclusive interview, Michael J. Fuchs, a World Bank financial sector and private development advisor, African region, said the EAC should instead focus on other issues, like developing infrastructure, instead of wasting time on a Monetary Union that will not deliver development to the region.“It’s totally irrelevant for the East African Community countries to have a Monetary Union now; it doesn’t make sense, they should first focus on developing infrastructure. “They will have this Monetary Union but it will not contribute positively towards the community; look at the one in the central African region, it has done nothing for them,” noted.A delegate from Kenya, who preferred anonymity, pointed out that some western countries and international organisations were against the development of East African Community. Dr Louis Kasekende, deputy governor, Bank of Uganda, said the proposed Monetary Union was significant and that all what was required was to list all the necessary requirements for the establishment of single currency and then press ahead with the implementation.“It’s relevant to our region; what we need is to agree on the timetable for its establishment, otherwise, all of us in the region need a Monetary Union”, the official said.