Experts hopeful on monetary union

Regional negotiators mooting the establishment of a regional monetary union are optimistic that plans to set up a single currency would be completed by the end of this year, Dr Thomas Kigabo, the Rwandan negotiator in the talks disclosed yesterday. Dr. Kigabo confirmed to The New Times that they were thrashing out the remaining issues, including the harmonisation of financial and bank laws before the monetary union is finally established. In attendance were East African Community officials, East African Legislative Assembly (EALA), members of the Rwandan chapter, among other government officials. The officials had convened to highlight regional issues and ways on how the country could benefit.Dr Kigabo, who is also the chief economist at the National Bank of Rwanda, mentioned that negotiators had acquired ample experience and lessons from other blocs using the single currency hence the enthusiasm that the currency would at last be attained.Recently, all chief negotiators of the monetary union from all EAC partner states visited the European Union to learn how the Euro works, a move that would help them in setting up the EAC single currency. “The monetary union will be achieved. We are currently discussing different issues concerning the harmonisation of monetary exchange rate policy, fiscal coordination and others in the financial sector,” Kigabo said.On why some European economists had recently advised the EAC to avoid rushing into the monetary union, Dr Kigabo observed that due to demonstrable regional political commitment, the monetary union would undoubtedly be established.“Europe faced many problems in establishing their monetary union as they didn’t have a model to compare to, which is not the case with ours. It took them many years because there were many countries. For us, we are just five (countries) and this will help us in completing negotiations early for the currency to start working,” he noted.He further mentioned that European nations lacked the political will that hindered their negotiations.According to Kigabo, EAC partner states have the political commitment to facilitate the monetary union to be realised early.The European Union consists of 27 member countries and it took them 44 years to negotiate and come up with a monetary union.Recently, during an International Monetary Fund conference held in Arusha, Tanzania, international economists mentioned that it was inopportune for the community to realise the single currency, advising that EAC should instead focus on implementation of already existing protocols.“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 the incentives among the partner states and the penalties for those who will not fulfil their obligations,” observed Prof. Paul Collier, an Economist at Oxford University, in exclusive interview with The New Times.In another exclusive interview, Michael J. Fuchs, a World Bank financial sector and private development advisor, African region, said the EAC should focus on other issues like expansion of infrastructure instead of wasting time on a monetary union that will not boost the development of 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,” he alluded.However, the Minister of East African Community, Monique Mukaruliza, insisted that all regional citizens who still possess negative attitudes towards the single currency should realise that it was envisaged to aid the region have smooth running businesses.“It’s not the first time to have a single currency. People should not be scared. What we are focusing on is making sure we avoid all the monetary evils that might arise as was the case in Europe,” she underscored.She further noted that monetary union is intended to spur regional economic growth, adding that it would not only help travellers but also all regional citizens.