The Heads of state of the five East African Community nations signed a monetary union deal on Saturday, clearing the way for an adoption of a single currency for the bloc.
After nearly a decade of talks, the clock is now ticking; with a ten-year timeline having been imposed for the establishment of the single currency.
Reached in Kampala, the agreement between Burundi, Kenya, Uganda, Tanzania and Rwanda dictates that from now, the powers will seek to establish the institutions which can support the single currency, including a regional central bank.
With a total, growing population currently numbering some 135 million people, East Africa is fast becoming an investment magnet.
Natural gas and oil discoveries abound across the bloc, with Kenya and Uganda discovering large amounts of oil and Tanzania boasting massive natural gas reserves.
International companies have already swooped in to capitalise on these resources; making the region a strong contender to become Sub Saharan Africa’s next major energy hub.
After creating the Customs Union in 2005, the Common Market five years later, and the Single Customs Territory deal last October, the Monetary Union Protocol marks the next important touchstone in the region’s transition from a group of conflict zones to a promising investment destination.
“[East Africa] is now fully embarked on enormous, ambitious and transformational initiatives,” said President Uhuru Kenyatta of Kenya.
“The promise of prosperity and economic development hinges on soundness of our integration,” he continued.
But vocal experts have also raised concerns.
One such individual, economist Oswald Leo of the East African Development Bank, notes “there remain a number of uncertainties about whether these countries can fully put in place a monetary union.”
The sentiment was furthered by Samuel Sitta, Tanzania’s Minister for the East African Cooperation, who stated “this separate coalition poses the risk to disintegrate the community rather than integrate it.”
In addition, whilst progress has been made, it has been slow, as each country worries about the overall impact on their individual economies.
The recently laid infrastructure plans to create cross border railway lines and regional pipelines have also come under fire, with Tanzania demanding they be reviewed in light of the agreement.
Nevertheless, the member states are also establishing the East African Monetary Institute in light of the deal, to manage monetary and exchange rate policies.
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