On November 30, 2013, East Africa Community head of states established the EAC Monetary Union and provided a 10-year roadmap for member states to embrace a single currency regime, in a colourful event in Kampala, Uganda.
This came hot on the heels of EAC Customs Union and the Common Market Protocols which were signed in 2004 and 2009 respectively.
Since then little headway has been done in bringing the idea to fruition. Key deadlines have been missed and the idea now is basically dead as a dodo. The EAC central bank governors in July noted that there have been delays in realising targets set out in the EAMU roadmap.
Realization of East Africa currency has been fraught with challenges
The EAC is way behind in setting up relevant institutions to support the single currency, most important being the East African Monetary Institute (EAMI), the equivalent of a regional central bank that was supposed to be up and running in 2015.
EAMI was expected to be a transitory institution to do all the preparatory work for the activation of a single currency regime before eventually transforming into an East African Central Bank.
Kenya’s Cabinet Secretary in-charge of EAC Affairs Adan Mohamed, who sits on the EAC Council of Ministers says a lot needs to be done before the idea can even dream of seeing the light of day.
“I think the first thing to do is to set up the East African Monetary Institute (EAMI) then we take it from there in terms of making the necessary progress. However, the necessary instruments for the creation of this body have been approved by the heads of state,” Mr Mohamed told The EastAfrican.
In May, EAC director of Monetary and Fiscal Affairs Pantaleo Joseph Kessy said compliance has been slower than expected.
Conditions for setting up East African Monetary Institute (EAMI)
Member countries are required to meet and comply with a debt-to-gross domestic product (GDP) ratio of 50%, fiscal deficit (including grants) of 3% of the GDP, overall inflation of 8% and forex reserves of 4.5 months of import cover for at least three years before the launch of the single currency regime.
Member countries have since reported mixed performances on this front with the deadline for compliance (2021) less than two years away. All signs now point to failure by member states beating the deadline.
On Friday, the Council was locked in a day-long meeting in Arusha, after which it resolved to draw new timelines to achieve the ambitious target of creating an EAC Monetary Union, which is one of the four pillars of regional integration.
“It has been noted that there are some elements of the East African Monetary Union (EAMU) roadmap lagging behind the agreed timeless. So directive by the Sectoral Council on Finance and Economic affairs is to review the EAMU roadmap and advise accordingly,” the EAC director of Monetary and Fiscal Affairs Pantaleo Joseph Kessy said.
Bank of Uganda Governor Emmanuel Tumusiime-Mutebile says the only hope in reviving the dream of a single currency lies in extending the deadline to give member states time to meet the set down conditions.
“There have been delays in realising targets set out in the EAMU roadmap and there are several challenges that could further impede the full implementation of EAMU Protocol.
It is therefore imperative that we assess the realism of the timelines,” Mr Tumusiime-Mutebile said at the 23rd Ordinary Meeting of the EAC Monetary Affairs Committee in Kigali in July.