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East Africa: Could a single currency exist one day?
The economic experts of the Community of East Africa (CEA) met in Kigali to discuss the implementation of a “single currency” between the five members of the sub-regional organisation.
However, the economic integration program which plans to establish this single currency is not yet ready. There are still difficulties with regard to the monetary and the fiscal systems.
The states of East Africa are expected to be unanimous in recognising that they must meet conditions that are individually and collectively responding to the convergence criteria as a prerequisite to establishing a sound currency.
Achieving convergence, as well as other structural and institutional criteria must pass through the reduction of inflation, the budget deficit, setting the limits of allowances on tax revenues, the stages of foreign currencies’ reserve, fixing the tax burden, setting the limits of public investment from tax revenues, and finally fixing the limits of mass wages to be taken from regular revenues. None of these criteria has yet been reached on behalf of the convergence. As for evidence, Rwanda wants to attract more investments and become a center of business and financial services in the region, while Kenya is the only member of the regional bloc to successfully conduct monetary policy against inflation and to ensure stability of prices compared to other CEA members – Kenya, Tanzania, Uganda, Burundi and Rwanda… This means that there is still much to do in promoting economic integration in the region with regard to monetary policy, and also there is still much to do to better align the goals of each country in a way to integrate them into those of the sub-region.