The seven member states of the. East African Community (EAC) will have a single currency within two years if all goes according to plan – but various issues remain unaddressed to reach that goal.
The announcement was made by Uganda’s First Deputy Prime Minister and Minister for East African Community Affairs (EAC) Rebecca Kadaga, during the Uganda-DR Congo Business Summit in Kinshasa this week.
Kadaga was responding to a concern in which traders had said they were finding difficulties to trade in certain currencies.
She said that if everything goes according to plan, the EAC will by 2024 have a Single Currency.
The Ugandan minister said member states are now working on the finer details to choose a country to host the East African Monetary Institute that will later become the East Africa Central Bank.
“By the end of this year, we should be knowing which country is hosting the monetary institute. The institute will be the East African Central Bank … We expect that if we move according to plan, by 2024, we shall have a Single Currency,” she told more than 200 delegates at the summit.
Already, Ms Kadaga noted, Uganda, Tanzania, Burundi and Kenya have submitted requests to host the institute and the four countries are being reviewed for a decision.
The EAC now has six member states including Rwanda Uganda, Tanzania, Burundi and DR Congo, which formally joined the bloc in April.
However, only four, apart from DR Congo, have so far ratified the Single Currency Protocol.
South Sudan remains an observer state because it has not yet harmonised internal laws and still has laws that prevent free movement of people.
The Monetary Union is the third step in the EAC regional integration that is expected to be capped by Political Federation. Already, EAC member states have been working on full attainment of a Customs Union and a Common Market, amid a number of challenges which include non-tariff barriers, trade blockades and closure of border points.
Whereas the EAC has set 2024 as the year of attaining the Monetary Union, a 2020 report by United Nations Economic Commission for Africa noted that divergences in monetary policies continue to stand in the way of attaining the single currency.
“It is critical to examine how economies are converging before forming a monetary union,” the report said, noting that an assessment of ceilings for inflation, fiscal deficit, a gross public debt and a sufficient level of foreign exchange reserves had returned a lot of convergencies, which partner states need to align before forming a Monetary Union.
Additional reporting from agencies