After ratifying the Customs Union and Common Market protocols, the East Africa Community (EAC) Partner States enter the third phase of the region's integration which entails having a Monetary Union. The region's leaders and technocrats deserve commendation for their effort. The greatest attraction of a monetary union is its ability to reduce transaction costs that will unlock the potential of the 126 million people market. Politically, a regional monetary union may safeguard member countries from irresponsible political elites that print money during electoral campaigns.
Whether the union will be adopted in the strictest sense of the term: complete abandonment of separate national currencies and full centralization of monetary authority into a single joint institution or in political terms: sharing or surrendering monetary authority ought to be clear.
The East Africa Community need not re-invent the wheel on matters of monetary union. The European Union's problem with Portugal, Ireland, Greece and Spain offer the best template on what can go wrong if member states do not adhere to strict fiscal discipline. The Economic and Monetary Community of Central Africa (CEMAC) also offer vital lessons that monetary union in itself will not unleash people's potential unless we invest in people, promote free movement and a sound business environment. The defunct Latin Monetary Union and Scandinavian Monetary Union offer good lessons too. The EAC must seek ways to involve a greater majority of citizens in the region in its vision and goals.
Comment on this article!