By Felix Andrew
MEMBERS of the East African countries (EAC) have been asked to harmonise macro-economic convergence criteria that would enable to have common currency in the region.
Already, EAC has adopted Monetary Union protocol which is an important stage in process of the regional integration.
Speaking to Azania Post in an exclusive interview, seasoned economist at Mzumbe University – Dar e s Salaam Campus, Prof Honest Ngowi, named the said criteria as inflation , unemployment and exchange rate.
Prof Ngowi was asked on whether it is possible for the members of the EAC to have a common currency while they differ in various aspects, the Economist said that it is possible.
Seasoned economist at Mzumbe University – Dar e s Salaam Campus, Prof Honest Ngowi
“There are what we call macro-economic convergence criteria that have to be harmonized, include inflation, unemployment and exchange,” he said.
The East African Monetary Union (EAMU) is an important stage in the process of East African Community (EAC) Regional Integration.
The EAMU Protocol was adopted in accordance with the EAC Treaty and signed on 30th November 2013; it lays groundwork for a monetary union within 10 years and allows the EAC Partner States to progressively converge their currencies into a single currency in the Community.
In the run-up to achieve a single currency, the EAC Partner States aim to harmonise monetary and fiscal policies; harmonise financial, payment and settlement systems; harmonise financial accounting and reporting practices; harmonise policies and standards on statistical information; and, establish an East African Central Bank.
However, there are some critics and suggestions from various organizations on best ways to allow the EAC enter into EAMU.
The International Monetary Fund fears that the integration of East African economies may have been built on quicksand and has called for a pause to lay a stronger foundation for its stability.
IMF managing director Christine Lagarde was quoted as saying fissures in the bloc over Economic Partnership Agreement, the single tourist visa, non-tariff barriers on movement of people, goods and capital were signs that the building blocks were not firmly in place.
“Coming from the European Union and a country that is part of the Eurozone, I would certainly stress that making haste slowly is probably the best way to go and consolidate one step at a time, to make sure that the steps you have taken are actually solid, sustainable and will take you to the next level,” Lagarde said while on a visit in Uganda recently.
She said the East African Community should focus on consolidating integration gains achieved in infrastructure, the Common Market and the Customs Union integration while going slow on the monetary union and federation projects in the wake of Britain’s exit from the EU.