National shocks jolt EAC plans for full integration

But without a converged monetary system, foreign exchange and currency risks as well as double taxation remain huge stumbling blocks to cross border trades.

Although the adoption of a common currency could reduce investors’ exposure to exchange rate risks, such a move is far from being adopted in the East African community.

And in the absence of hedging instruments, investors will have no option but to take both interest rate and foreign exchange risk when they seek out investments in the region.

Earlier, Kenya and Uganda negotiators for regional integration had urged that the legal requirements of a full transfer of monetary sovereignty to the regional level carry the danger of exposing their countries’ financial sectors to external shocks.

An earlier report on the creation of a monetary union by the European Central Bank had suggested two strategies; keeping the monetary union as an aim with no public time-frame or partner states committing themselves to a firm date for the start of the union.