EAC to delay in attaining one currency

The East African Community (EAC) may not attain the single currency as per the agreed timeframe of 2024.
This publication has established that a technical working group of the ministries of Finance of the EAC partner states have mooted a proposal to extend the attainment of a single currency to 2031.

The EAC secretary general, Dr Peter Mathuki, confirmed the developments last week, saying the proposal is currently before the EAC Council of Ministers.
“I can confirm that the technical working group has completed their report, which has also been submitted to the council of ministers of EAC, ” he said during an event to mark 23 years of the EAC.
Dr Mathuki also said the council is reviewing the report to establish an East African Monetary Institute which will act as a roadmap towards a common currency.
He said the council is expected to meet this month to consider the proposals.

Timeframe still far
However, Dr Mathuki expressed concern that extending the timeframe from 2024 to 2031 is way too far.
“I am not very sure if you will be patient as well to wait until 2031 to get the EAC currency, we are looking at sooner than later to have it,” he said.
The assessment conducted by the EAC secretariat in Arusha indicates that the customs union and common market protocols are not yet fully implemented.
Failure to implement the two protocols has resulted in failure to attain the third pillar, a monetary union, whose main manifestation is a common currency.

Attaining a common currency requires that all the partner states observe the macro-economic convergence criteria by 2021 of a headline inflation of 8 percent, gross public debt of 50 percent of GDP, a reserve 4.5 months of import cover and the ceiling on the overall deficit of not more than 3 percent of GDP, including grants.
However, Kenya, Burundi and Rwanda have gone beyond the debt ceiling and hence a call for the extension.

Currently, the East African Legislative Assembly has passed laws to establish the East African Monetary Institute, the East African Statistics Bureau, the East African Surveillance, Compliance and Enforcement Commission, and the EAC is awaiting the establishment of the East African Financial Services Commission, all geared towards the implementation of the monetary union. The Monetary Union is expected to be realised by 2024 but several institutions needed to attain it have not been established.