East African leaders vow to fast-track single currency plan

East African leaders have agreed to rapidly push forward the planned creation of a Monetary Union to boost trade by signing a new treaty to expand the mandate of a regional court to resolve trade and investment disputes.

They also set July as the deadline for ensuring all previous treaties are fully implemented to pave the way for smooth regional trading.

At the conclusion of week-long ministerial meetings ending up with a Heads of State Summit of the East African Community (EAC) in Nairobi on Friday, the leaders agreed a Monetary Union would act as the last step towards the formation of a political federation.

“The roadmap to the Monetary Union should remain on track,” said Tanzanian President Jakaya Kikwete, the new chairman of the regional body grouping five countries – Burundi, Kenya, Rwanda, Uganda and Tanzania.

“We should attain more economic convergence before moving to the next stage,” he said.

The next stage seeks to have a political federation of East Africa. The summit resolved to initiate the process of forming the federation by calling for a ministerial meeting in April to review the work of a panel of law experts consulted on the issue.

Traders in East Africa say efforts to ease movement of people has resulted into better terms of trade, with companies reporting better profits and growth in regional trade.

Kenya Association of Manufacturers (KAM) CEO Betty Maina said easing of movements and travel restrictions has been aided by agreements reached by the five countries.

“The benefits of free movement of services would lower prices and improve variety of consumer choices,” Maina said.

With more emphasis on improving business relations, the leaders of the five countries agreed to remove roaming charges for all travelers around the region. The five states will also harmonize call charges by July to ease business communication across the region.

The five countries are also racing towards a 2018 deadline of launching a single East African currency.

There are worries a delay by three countries, Burundi, Kenya and Uganda, to pass laws and regulations authorizing the EAC Secretariat to continue with the negotiations may delay the single currency plan.

“The institutions to run the Monetary Union need to be authorized,” said Richard Sezibera, the EAC Secretary General.

A treaty for the creation of the Monetary Union was signed in November 2014. They pave the way for the regional parliament to make laws to create an East African Monetary Institute, an East African Statistics Bureau and the East African Surveillance, Compliance and Enforcement Commission.

An East African Financial Services Commission to regulate the financial sector would also be required to make the Monetary Union work.

Kenyan President Uhuru Kenyatta said with progress made to promote free movement of people and facilitate cross-border trade, East Africa is moving towards “unity and happiness” for its people.

“Critical milestones have been achieved in this process of integration,” said Kenyatta. The Kenyan leader pointed to the growth in cross-border trade, which hit 5.8 billion U.S. dollars in 2013 from 3.5 billion dollars in 2009.

“This (trade growth) points to strong opportunities for impressive growth in trade within our borders underpinned by the growth within the region,” said the president.

The regional body has also attracted investments from foreign firms, reporting 8.3 percent growth in Foreign Direct Investments (FDI) in 2013 alone.

Efforts to bolster regional trade have not been all smooth sailing. A progress report prepared for the EAC Summit by its Council of Ministers showed Kenya and Rwanda were leading with the implementation of 75 percent of all decisions and resolutions agreed upon by the region since 2001.