The introduction of a single currency for the East Africa region has been met by headwinds and the 2024 target may not be met, Central Banks have said.
A committee drawn from the six Central Banks from the East African Community (EAC) said in a joint communique after a virtual meeting on Friday that there have been delays in realising targets set out in the East African Monetary Union (EAMU) roadmap.
The committee added that several challenges could further impede the timely implementation of the EAMU protocol.
“Therefore, the Committee pledged to work with the EAC Secretariat and other stakeholders in the integration process to fast-track pending activities of the EAMU roadmap.”
Since the project’s inception in 2000, Kenya, Uganda, Tanzania, Burundi, Rwanda and most recently South Sudan have been laying the groundwork for EAC single currency which is expected to enhance economic integration.
Central bankers said some of the milestones towards the goal include the creation of key institutions such as the East African Monetary Institute (EAMI) and harmonisation of monetary and exchange rate policies as well as regulatory frameworks.
Others are the strengthening of regional payments systems, enhancement of cybersecurity frameworks, capacity building in anti-money-laundering (AML) and countering the financing of terrorism (CFT) risk management for partner states Central Banks and promotion of cross-border trading in government securities.
To make cross border transactions at the moment, local traders and individual travellers either have to change their money into US dollars or convert it from one national currency to the other depending on the number of countries involved, a process that on average claims 20 percent of the money value, according to some estimates.
The region’s monetary union seeks to unite the fiscal and trade policies of Kenya, Tanzania, Uganda, Rwanda, Burundi and South Sudan allowing citizens to trade and interact freely.
A proposal has been put forward that the East African Shilling (EAS) will be adopted in a monetary union —a currency abandoned more than three decades ago before the collapse of the first EAC integration.
Monetary unions and common currency areas are not new to Africa. The West African Economic and Monetary Union, for one, was formed in 1994 and shares the CFA franc among eight West African countries, while Namibia, Swaziland, and Lesotho have been linking their currencies to the South African rand under a Common Monetary Area established in 1986.
Measures such as establishing an EAC customs union has helped streamline border clearances, simplify work permit issuance, and ensure the recognition of professional agreements by member countries.