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

Photogallery Pistorius Sentenced, Taken to Prison

Pistorius, convicted of culpable homicide in shooting death of girlfriend Reeva Steenkamp, will likely serve about 10 months of five-year sentence, before completing it under house arrest More

UN to Aid Central Africa in Polio Vaccinations

Synchronized vaccinations will be conducted after Cameroon reports a fifth case of the wild polio virus in its territory More

WHO: Ebola Vaccine May Be in Use by Jan.

WHO assistant director Dr. Marie Paule Kieny says clinical trials of Ebola vaccines are underway or planned in Europe, US and Africa 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.
After Decades of Pressure, Luxembourg Drops Bank Secrecy Rulesi
X
October 21, 2014 12:20 AM
European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.
Video

Video Young Nairobi Tech Innovator on 'Track' in Security Business

A 24-year-old technology innovator in Nairobi has invented a tracking device that monitors and secures cars. He has also come up with what he claims is the most robust audio-visual surveillance system yet. As Lenny Ruvaga reports from the Kenyan capital, his innovations are offering alternative security solutions.
Video

Video Latinas Converting to Islam for Identity, Structure

Latinos are one of the fastest growing groups in the Muslim religion. According to the Pew Research Center, about 6 percent of American Muslims are Latino. And a little more than half of new converts are female. VOA’s Carolyn Presutti travelled to Miami, Florida -- where two out of every three residents is Hispanic -- to learn more.
Video

Video Exclusive: American Joins Kurds' Anti-IS Fight

The United States and other Western nations have expressed alarm about their citizens joining Islamic State forces in Syria and Iraq. In a rare counterpoint to the phenomenon, an American has taken up arms with the militants' Syrian Kurdish opponents. Elizabeth Arrott has more in this exclusive profile by VOA Kurdish reporter Zana Omer in Ras al Ayn, Syria.
Video

Video South Korea Confronts Violence Within Military Ranks

Every able-bodied South Korean male between 18 and 35 must serve for 21 to 36 months in the country’s armed forces, depending upon the specific branch. For many, service is a rite of passage to manhood. But there are growing concerns that bullying and violence come along with the tradition. Reporter Jason Strother has more from Seoul.
Video

Video North Carolina Emerges as Key Election Battleground

U.S. congressional midterm elections will be held on November 4th and most political analysts give Republicans an excellent chance to win a majority in the U.S. Senate, which Democrats now control. So what are the issues driving voters in this congressional election year? VOA National Correspondent Jim Malone traveled to North Carolina, one of the most politically competitive states in the country, to find out.
Video

Video Comanche People Maintain Pride in Their Heritage

The Comanche (Indian nation) once were called the “Lords of the Plains,” with an empire that included half the land area of current day Texas, large parts of Oklahoma, New Mexico, Kansas and Colorado.The fierceness and battle prowess of these warriors on horseback delayed the settlement of most of West Texas for four decades. VOA’s Greg Flakus reports from Lawton, Oklahoma, that while their warrior days are over, the 15,000 members of the Comanche Nation remain a proud people.
Video

Video Turkey Campus Attacks Raise Islamic Radicalization Fears

Concerns are growing in Turkey of Islamic radicalization at some universities, after clashes between supporters of the jihadist group Islamic State (IS) or ISIS, and those opposed to the extremists. Pro-jihadist literature is on sale openly on the streets of Istanbul. Critics accuse the government of turning a blind eye to radicalism at home, while Kurds accuse the president of supporting IS - a charge strongly denied. Henry Ridgwell reports from London.

All About America

AppleAndroid