Lack of proper statistics and coordination are the main challenges facing the proposed common currency for the East African Community member states.
While regional ministers read the budget on the same day, other institutions like the bureau of standards have not been meeting to harmonise areas that are crucial in having a common currency.
Dr. Enos Bukuku, the EAC Deputy Secretary General in charge of planning and infrastructure says there is need to use the same yard stick to gauge the different economies. According to Bukuku, statistics on inflation, fiscal deficit as well as Gross Domestic Product (GDP) need to be harmonised in order to have monetary union.
The Monetary Affairs Committee that is currently dealing with the monetary component focuses on areas like exchange rate policies, currency convertibility, financial statistics harmonisation and debt sustainability.
Dr. Bukuku says technical staff from all the five member states needs to be highly coordinated on fiscal policy issues in order to achieve the common currency.
He says there is need to integrate the financial market sector that includes banking, capital markets, pension insurance and microfinance.
//Cue in: statistics is very crucial….
Cue out:……monetary union.//
Monetary Union is the third stage of EAC integration after the establishment of EAC Customs Union in 2005 and a Common Market in January 2010.
The monetary integration will see the member countries co-operate in economic and fiscal matters aimed at reducing the costs and risks of doing cross border business. By embracing a single currency, EAC member states would also remove the costs of having to transact in different currencies and the risk of adverse exchange rate movements for traders and travelers.
Eriya Kategaya, Uganda’s East African Community Affairs Minister urges all the member states to harmonise their fiscal policies in order to achieve such benefits. He says states should not be escapist by wanting the monetary union without converging the policies.
//Cue in: you cannot have …..
Cue out:….. Fiscal policies.//
According to the East African Community Treaty, in order for member states to harmonise the monetary and fiscal policies they have to remove all exchange restrictions on imports and exports within the Community. The countries in the community will have to harmonise their tax policies with a view to removing tax distortions. This, the treaty states will bring a more efficient allocation of resources within the Community.
About $1.6 million was set aside in the 2011/2012 budget by the member states to fast track the EAC Monetary Union Protocol. Dr. Bukuku says the Protocol will be complete by the end of the year but this will not mean that common currency will be in place. He says there will be time to educate the masses on how it will work. He, however, did not commit himself on the time needed for implementation.
