EA needs own monetary union

Various stakeholders met in Arusha, Tanzania, recently to consider a road map to establishment of the East African Monetary Union. They say unity is strength.

Nothing captures the mood of the ancient saying better than the philosophy behind the East African Community.

For starters, the East African Community (EAC) is the regional intergovernmental organisation of the Republics of Kenya, Uganda, the United Republic of Tanzania, Republic of Rwanda and Republic of Burundi with its headquarters in Arusha, Tanzania.

The partnership aims at widening and deepening co-operation among the member States - politically, economically and socially for their symbiotic benefits.

The initial idea was for the EAC countries to establish a Customs Union in 2005; a Common Market by 2010, consequently a Monetary Union by 2012 and ultimately a Political Federation of the East African States.

But what are the real benefits of this ‘thing’ every leader seems excited to embrace?

My friend jokingly says that may be that will be a good idea to placate the cock- fights over scarce resources between the member states- including the contentious Migingo Island.

In a nutshell, regional integration aims to improve economic outcomes for all member states involved, although in practice not all participants achieve the same degree of benefit.

The ideal situation is which all states enjoy equal share of the benefits.

Unfortunately, ideal situations are so rare and often attributable to a utopian setting.

For instance, Tanzanians have always been sceptical about the arrangement and often times their authorities do not recognise harmonised regulatory standards already negotiated and in place.

We need to dismantle the belief that an Englishman’s home is his castle.

There may be better things done in other ‘homes’- so to speak.

Just recently I watched a car dealer, on a local TV station, bitterly complaining that despite the EAC customs union being in place, Tanzanian revenue authorities at the borders continue charging exorbitant duty and taxes on goods and products imported from Kenya.

“What is the essence of the customs union then?” he asked.

Sample this; a large regional economic bloc encircling Burundi, Kenya, Rwanda, Tanzania and Uganda with a combined population of more than 125 million people, land area of 1.82 million square kilometres and a combined Gross Domestic Product of $60 billion as per year 2008 figures.

This is by any standards a huge market with massive potential.

To favourably compete against big economies like the exponentially growing Republic of China, combining of efforts is vital.

According to 2008 statistics, China was the third largest economy in the world with a GDP of $4.9 trillion and a labour force of 812.7 million people!

The gross annual revenues and Exports stood at $868.6 billion and $1.20 trillion respectively.

How do you expect Kenya or even he smaller Burundi to counter such an economic giant alone?

Economic integration is not a matter of choice- if this region is to be taken seriously in the ‘shark-filled’ oceans of competitive global trade market.

As a matter of fact, the European Union is a product of the European Community; the West African Monetary Zone (WAMZ) a product of the Economic Community of West African States (Ecowas).

Indeed, currently, 15 West African countries use the CFA as their common currency which is directly linked to the Euro.

The general hypothesis is that regional integration is a way to maximize economic benefits for all participants, but in reality some problems do arise.

For instance, do all member states have equal say in policies set by the regional institutions that oversee cooperation. Are there more powerful, pivotal, states that have greater say?

This is the problem with EAC, where some states consider Kenya as the ultimate beneficiary from this arrangement.

Economic problems might affect members disproportionately, such that some states will be net recipients of some form of aid while others will be net lenders of aid.

How to agree on methods of resolving political problems, where political integration is already achieved?

How do we manage immigration policies amongst others? Analysts will agree that as we pursue this noble goal of integration bearing in mind there will be challenges along the way.

For instance, issues regarding sovereignty of the states, overlapping memberships with other blocs, language barriers, conflicting interests at national and regional levels, dispute solution mechanisms amongst others.

We must religiously guard this great idea; we must seek ways to make it work.

The member countries must seek ways to bridge the seemingly evident information gap through aggressive sensitisation of the benefits to reap from the community especially regarding the Customs Union.

jkihuro@yahoo.com