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

Tired of Waiting, South Africans Demand Change ‘Now’

With chronic poverty and lack of basic services largely fueling recent xenophobic attacks, many in Rainbow Nation say it’s time for government to act More

Challenges Ahead for China's Development Plans in Pakistan

Planned $46 billion in energy and infrastructure investments in Pakistan are aimed at transforming the country into a regional hub for trade and investment More

Audio 'Forbidden City' Revisits Little Known Era of Asian-American Entertainment

Little-known chapter of entertainment history captured in 80s documentary is revisited in new digitally remastered format and book 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.
Study: Insecticide Damaging Wild Bee Populationsi
X
April 24, 2015 10:13 PM
A popular but controversial type of insecticide is damaging important wild bee populations, according to a new study. VOA’s Steve Baragona has more.
Video

Video Study: Insecticide Damaging Wild Bee Populations

A popular but controversial type of insecticide is damaging important wild bee populations, according to a new study. VOA’s Steve Baragona has more.
Video

Video Data Servers Could Heat Private Homes

As every computer owner knows, when their machines run a complex program they get pretty hot. In fact, cooling the processors can be expensive, especially when you're dealing with huge banks of computer servers. But what if that energy could heat private homes? VOA’s George Putic reports that a Dutch energy firm aims to do just that.
Video

Video Cinema That Crosses Borders Showcased at Tribeca Film Festival

Among the nearly 100 feature length films being shown at this year’s Tribeca Film Festival in New York City are more than 20 documentaries and features with international appeal, from a film about a Congolese businessman in China, to documentaries shot in Pakistan and diaspora communities in the U.S., to a poetic look at disaffected South African youth. VOA’s Carolyn Weaver has more.
Video

Video UN Confronts Threat of Young Radicals

The radicalization and recruitment of young people into Islamist extremist groups has become a growing challenge for governments worldwide. On Thursday, the U.N. Security Council heard from experts on the issue, which has become a potent threat to international peace and security. VOA’s Margaret Besheer reports.
Video

Video Growing Numbers of Turks Discover Armenian Ancestry

In a climate of improved tolerance, growing numbers of people in Turkey are discovering their grandmothers were Armenian. Hundreds of thousands of Armenians escaped the mass deportations and slaughter of the early 1900's by forced conversion to Islam. Or, Armenian children were taken in by Turkish families and assimilated. Now their stories are increasingly being heard. Dorian Jones reports from Istanbul that the revelations are viewed as an important step.
Video

Video Migrants Trek Through Western Balkans to Reach EU

Migrants from Africa and other places are finding different routes into the European Union in search of a better life. The Associated Press followed one clandestine group to document their trek through the western Balkans to Hungary. Zlatica Hoke reports that the migrants started using that route about four years ago. Since then, it has become the second-most popular path into Western Europe, after the option of sailing from North Africa to Italy.
Video

Video TIME Magazine Honors Activists, Pioneers Seen as Influential

TIME Magazine has released its list of celebrities, leaders and activists, whom it deems the world’s “most influential” in 2015. VOA's Ramon Taylor reports from New York.
Video

Video US Businesses See Cuba as New Frontier

The Obama administration's opening toward Cuba is giving U.S. companies hope they'll be able to do business in Cuba despite the continuation of the U.S. economic embargo against the communist nation. Some American companies have been able to export some products to Cuba, but the recent lifting of Cuba's terrorism designation could relax other restrictions. As VOA's Daniela Schrier reports, corporate heavy hitters are lining up to head across the Florida Straits - though experts urge caution.
Video

Video Kenya Launches Police Recruitment Drive After Terror Attacks

Kenya launched a major police recruitment drive this week as part of a large-scale effort to boost security following a recent spate of terror attacks. VOA’s Gabe Joselow reports that allegations of corruption in the process are raising old concerns about the integrity of Kenya’s security forces.
Video

Video Japan, China in Race for Asia High-Speed Rail Projects

A lucrative competition is underway in Asia for billions of dollars in high-speed rail projects. Cambodia, India, Indonesia, Malaysia Thailand and Vietnam are among the countries planning to move onto the fast track. They are negotiating with Japan and the upstart Chinese who are locked in a duel to revolutionize transportation across Asia. VOA Correspondent Steve Herman in Bangkok has details.
Video

Video Scientists: Mosquitoes Attracted By Our Genes

Some people always seem to get bitten by mosquitoes more than others. Now, scientists have proved that is really the case - and they say it’s all because of genes. It’s hoped the research might lead to new preventative treatments for diseases like malaria, as Henry Ridgwell reports from London.
Video

Video Bible Museum Coming to Washington DC

Washington is the center of American political power and also home to some of the nation’s most visited museums. A new one that will showcase the Bible has skeptics questioning the motives of its conservative Christian funders. VOA religion correspondent Jerome Socolovsky reports.
Video

Video Armenia and Politics of Word 'Genocide'

A century ago this April, hundreds of thousands of Armenians of the Turkish Ottoman empire were deported and massacred, and their culture erased from their traditional lands. While broadly accepted by the U.N. and at least 20 countries as “genocide”, the United States and Turkey have resisted using that word to describe the atrocities that stretched from 1915 to 1923. But Armenians have never forgotten.
Video

Video Afghan First Lady Pledges No Roll Back on Women's Rights

Afghan First Lady Rula Ghani, named one of Time's 100 Most Influential, says women should take part in talks with Taliban. VOA's Rokhsar Azamee has more from Kabul.
Video

Video New Brain Mapping Techniques Could Ease Chronic Pain

From Boulder, Colorado, Shelley Schlender reports that new methods for mapping pain in the brain are providing validation for chronic pain and might someday guide better treatment.

VOA Blogs