News / Africa

East Africa Looks Towards Single Currency by 2012

Michael Onyiego

With the East African Community Common Market Protocol now in effect, the region is looking to launch a single currency by 2012.  Many hope the integration will break down economic barriers across the region, but there is much work to be done before the regional dream is realized.  

The members of the East African Community, Kenya, Rwanda, Tanzania, Burundi and Uganda, officially launched the Common Market Protocol on July 1.  Under the protocol, the region hopes to unlock the economic potential of its vast natural resources and more than 130 million inhabitants.

With the start of the common market, member states have agreed to open their borders to each other and allow goods and services to move between countries without fees or restrictions.  The protocol has also removed barriers for people, allowing citizens in the region to live and work anywhere in East Africa without work permits.

The common market is essentially the first phase in the vision for regional integration.  By 2012, the East African Community hopes to implement a single currency and monetary union for member states.

Analyst on the Kenyan economy Robert Shaw says integration makes perfect sense for East Africa.

"In the global world, a single country, and particularly a single African country which has a very small economy, it makes sense for there to be a greater bloc, for two reasons:  One, the potential for trading within that block is great, and we've seen it.  We've seen it even with the tentative moves that have gone so far," said Shaw.  "The increasing trading between Kenya, Uganda, Tanzania, to a lesser extent Rwanda, etc. has increased year after year.  It makes sense.  The second point there is, that the bigger your market, that is much more attractive for investors, locally and internationally."

Investors are already taking notice of the region's potential.  According to the United Nation's 2010 World Investment Report, the region received more than $2 billion worth of foreign investment in 2009 alone.  Shortly after the common market became operational, Turkey announced it would establish an export processing zone within the East AFrican Community to expand trade with the region.

The promise of the new market is also attracting new countries.  South Sudan is widely expected to become an independent state after a referendum this January.  Analysts such as Robert Shaw believe the new state will opt to join the EAC.

But there are many obstacles to overcome before a single east African currency can become reality.

The common market took effect on July 1, but Shaw notes there are still many barriers preventing its full implementation.  All of the EAC members agree in principle to the benefits of the expanded market, but there are differing visions for achieving it.

While Kenya and Rwanda have already moved to eliminate work permit requirements for east African citizens, Uganda, Rwanda and Burundi have retained their requirements.  The Ugandan government has also advocated for regional work permits rather than their complete elimination.

And despite the elimination of visas for citizens in the region, many are still subject to restrictions at the border.

But many in the East African Community remain confident that a monetary union can be achieved by 2012.

EAC Deputy Secretary General Alloys Mutabingwa says that concerted regional reform will lay the groundwork for a common currency.

"It is sounding ambitious, but we are optimistic we will achieve that target.  For the common currency to effectively be in place, we are looking at three main things to be accomplished.  One is the common market itself having to be effective,"Mutabingwa said.  "Two is the convergence of most of our macroeconomic policies.  Three is the legal side; the laws governing the common market having to be integrated."  

According to Mutabingwa, EAC members will start negotiations soon to unify regional policy regarding the market.  The deputy secretary general also told VOA that mechanisms such as an East African Community Monetary Institute were being established to guide the integration process and oversee the creation of the common currency.

If the monetary union is established, it could be a step towards an even more ambitious venture.

The stated goal of the East African Community is to set up a political federation by 2015.  While expectations for the proposed state range from a European-style union to a fully integrated east African nation, observers believe the federation could be an economic and political leader in Africa.

But the success of the federation is dependent on the success of the current economic integration.  If the common market and the monetary union are properly implemented, they could create a new country on the continent.

You May Like

Video Analysts: Beijing Parade a 'Bazaar' of Stolen Technology

Show commemorating victory over Japan in World War II involved long, medium and short range missiles, a range of tanks and 200 fighter aircraft More

Bernie Sanders Surge Reflects US Shift on Socialism

Although most analysts say it is unlikely he will get the Democratic nomination, Sanders' campaign opens up questions and issues that are otherwise marginalized More

Video On IS Frontline, Kurdish Fighters Ready for Offensive

Peshmerga soldiers say although they need more heavy artillery, they are poised to take the fight to the Islamic State extremists on their turf More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Drowned Migrant Toddler Photo Triggers European Outragei
X
Henry Ridgwell
September 04, 2015 11:36 AM
The harrowing picture of a drowned three-year-old Syrian boy washed up on a Turkish beach appears to have galvanized Europe’s leaders into doing more to address the refugee crisis. France, Germany and Italy issued a joint call Thursday for compulsory quotas of refugees for all EU states. But there were chaotic scenes in Hungary as police tried to force migrants off a train heading for Austria. Henry Ridgwell has more. And a caution, some of the images in this report may be disturbing.
Video

Video Drowned Migrant Toddler Photo Triggers European Outrage

The harrowing picture of a drowned three-year-old Syrian boy washed up on a Turkish beach appears to have galvanized Europe’s leaders into doing more to address the refugee crisis. France, Germany and Italy issued a joint call Thursday for compulsory quotas of refugees for all EU states. But there were chaotic scenes in Hungary as police tried to force migrants off a train heading for Austria. Henry Ridgwell has more. And a caution, some of the images in this report may be disturbing.
Video

Video Russians Observe 11th Anniversary of Beslan School Attack

This week, Russians have been observing the 11th anniversary of the attack by Islamic militants on a school in Russia's North Caucasus region that killed more than 330 hostages, including 186 children. The three-day siege and massacre that started on September 1, 2004 took place in Beslan, a town in the republic of North Ossetia, and is one of the bloodiest terrorist acts ever in Russia. VOA's Mike Richman reports.
Video

Video Native Americans Debate: Father Serra, Saint or Sinner?

Pope Francis will canonize an 18th century missionary to Spanish California during a papal visit to the United States this month.  But some Native Americans have criticized the elevation to sainthood of the missionary priest, Junipero Serra. VOA's Mike O’Sullivan has more from Los Angeles.
Video

Video Calais School Offers Another Face of Europe’s Migrant Crisis

Europe is facing mounting criticism over how it’s handling its biggest migration crisis since World War II. But not all Europeans believe building walls or passing repressive policies are the answer. A school for migrants in the French port city of Calais, is opening doors and building bonds across nationalities. VOA's Lisa Bryant reports.
Video

Video Kurdish Fighters on IS Frontline Ready for Offensive

Finger on the trigger, the Kurdish Peshmerga soldier stared across the dust at a village taken over by Islamic State extremists. The Kurdistan’s Khazir frontline, just 45 minutes from the Islamic State stronghold of Mosul. And at this point, the militants were less than two kilometers away. VOA's Sharon Behn reports.
Video

Video China Announces Troop Cuts at WWII Parade

Chinese President Xi Jinping Thursday announced plans to cut the world’s largest military force by 300,000 troops. The announcement was made during a massive military parade to commemorate victory over Japan in World War II. The event was shunned by most Western leaders and for some is raising fresh concerns about China’s military ambitions. VOA’s Bill Ide has more from Beijing.
Video

Video Russia-Japan Relations Cool as Putin Visits China for WWII Anniversary

Russian President Vladimir Putin is in Beijing for commemorations of the 70th anniversary of China's WWII victory over Japan. Putin is expected to visit Japan later this year, but tensions between Tokyo and Moscow over islands disputed since the war, and sanctions over Ukraine, could pour cold water on the plan. VOA's Daniel Schearf reports.
Video

Video Yemen ‘on Brink of Disaster’ as Medical Shortages Soar

Aid agencies warn Yemen is on the brink of humanitarian disaster – with up to half a million children facing severe malnutrition, and hospitals running out of basic medicines. There are fears Yemen's civil war could escalate as the coalition led by Saudi Arabia tries to drive back Houthi rebels, who seized control of much of the country earlier this year. Henry Ridgwell reports.
Video

Video Apps Helping Kenyan Businesses Stay Ahead of Counterfeiters

Counterfeit goods in Kenya cost the government as much as $1 billion each year in lost tax revenues. The fake goods also hurt entrepreneurs who find it hard to carve out a niche in the market and retain customers. But as Lenny Ruvaga reports from Nairobi, information technology is being used to try to beat the problem.
Video

Video Nobel Prize Winner Malala Talks to VOA

Nobel Peace Prize winner Malala Yousafzai met with VOA's Deewa service in Washington Sunday to talk about women’s rights and unveil a trailer for her new documentary. VOA's Katherine Gypson has more.
Video

Video War, Drought Threaten Iraq's Marshlands

Iraq's southern wetlands are in crisis. These areas are the spawning ground for Gulf fisheries, a resting place for migrating wildfowl, and source of livelihood for fishermen and herders. Faith Lapidus has more.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Rebuilding New Orleans' Music Scene

Ten years after Hurricane Katrina inundated New Orleans, threatening to wash away its vibrant musical heritage along with its neighborhoods, the beat goes on. As Bronwyn Benito and Faith Lapidus report, a Musicians' Village is preserving the city's unique sound.
Video

Video In Russia, Auto Industry in Tailspin

Industry insiders say country relies too heavily on imports as inflation cuts too many consumers out of the market. Daniel Schearf has more from Moscow.
Video

Video Scientist Calls Use of Fetal Tissue in Medical Research Essential

An anti-abortion group responsible for secret recordings of workers at a women's health care organization claims the workers shown are offering baby parts for sale, a charge the organization strongly denies. While the selling of fetal tissue is against the law in the United States, abortion and the use of donated fetal tissue for medical research are both legal. VOA’s Julie Taboh reports.

VOA Blogs