What are the risks of the current timeframes set for developing the EAC Monetary Union?
RICHARD SEZIBERA: The Monetary Union Protocol was signed in 2013, and it sets out a 10-year roadmap to a single currency for East Africa. Most importantly, it provides for fiscal, financial and monetary policy harmonisation. Partner states have agreed on critical macroeconomic convergence criteria. Work on fiscal, financial and monetary harmonisation is ongoing. The EAC has introduced the East African Payments System and has started work on tax harmonisation, including value-added tax and excise duty. Accelerated implementation of the Customs union and common market will provide the bedrock for the success of the monetary union.
The biggest challenge will be the development of the requisite institutions to manage a monetary union at the regional level. These include a regional statistics body, a fiscal surveillance board, a monetary institute and, eventually of course, an East African central bank.
It is also necessary to ensure our partner states meet the macroeconomic criteria delineated in the protocol. These goals are all certainly ambitious and require political commitment and fiscal discipline. We need to continue with efforts to integrate and deepen our financial sector, and we are working with our partners on this. The Monetary Affairs Committee, which brings together all the central bank governors, has done stellar work and has developed an ambitious but practical development plan on monetary policy harmonisation.
In what ways does Kenya stand to benefit from a more deeply integrated EAC?
SEZIBERA: East Africa is interesting because if you look at the continent as a whole, the population is largely concentrated along the coast with a relatively sparse population in the hinterland. But in East Africa, the biggest centres of population density are inland. For us, the only way to grow is to ensure our coasts serve our people who are in this hinterland. Therefore, integration for East Africa, apart from being historical, is even more urgent than anywhere else on the continent. Kenya can only continue to grow if it invests in widened and deepened integration.
In the beginning, people were worried that Kenya would dominate the community in terms of trade benefits. This has certainly not occurred. Tanzania and Uganda have seen the biggest growth in intra-EAC exports. Kenya has become an important source of foreign direct investment for our other partner states. Intra-EAC trade is the fastest growing on the continent, standing at 26%, up from a mere 10% a decade ago. But more importantly, the quality of this trade is different from our trade with the rest of the world.
Generally, we trade value-added manufactured goods in the community and export raw materials to the rest of the world. Kenya’s policy decision to concentrate on the regional market is the right one and will contribute to Kenya' s journey to middle-income status.
What are the EAC’s most urgent priorities in terms of poverty eradication in the region?
SEZIBERA: Integration in the EAC is aimed at the socioeconomic development of the people of East Africa. Every component of the EAC’s strategy is meant to raise the living standards of the populace, and this of course means lifting them out of poverty.
Because we are the only economic community with the explicit aim of becoming a political federation, we must carry the people of East Africa with us at every stage of our journey. That is why investments in regional organs, such as the East African Legislative Assembly and the East African Court of Justice, are vital. We must ensure all these institutions work properly and for the benefit of the people.
Mobilisation also involves promoting the free movement of services, capital and labour. We provide an environment that allows the growth of business, including those based on agriculture and agro-industry. This has the potential to contribute to stem rising unemployment and contribute to prosperity in the region.
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