EAC single currency unlikely by 2024, central banks say 

East African central banks have cast a shadow of doubt over the proposed implementation of a single currency regime by 2024.

The central banks cite delays by member states to realise targets set out in the Monetary Union roadmap.

The single currency regime is expected to eliminate transaction costs of exchanging currencies and remove exchange rate volatility in cross-border trading activities.

However, through the East African Community Monetary Affairs Committee (MAC), EAC central banks have noted that while significant progress has been made towards realisation of a monetary union there are several challenges which could still impede the timely implementation of its protocol.

In a virtual meeting, the Committee, chaired by Kenyan Central Bank governor Patrick Njoroge, singled out the cross-border payment systems, arguing that there is still more progress which needs to be done on this front.

“The Committee noted that there have been delays in realising targets set out in the EAMU [East Africa Monetary Union] roadmap and that there are several challenges that could further impede the timely implementation of EAMU protocol,” a statement said.

“Therefore, the Committee pledged to work with the EAC Secretariat and other stakeholders in the EAC integration process to fast-track pending activities of the EAMU roadmap,” the statement said further

The Committee also noted that partner states’ central banks have made significant strides towards implementation of the Monetary Union, including the creation of key institutions of the of the EAMU, and harmonisation of monetary and exchange rate policies.

Other achievements include harmonisation of regulatory frameworks, implementation of measures to strengthen regional payments systems, and enhancement of cybersecurity frameworks.

In 2019, the plan to have a single East African currency by 2024 collapsed after the EAC Council of Ministers, the central decision-making and governing organ of the EAC, resolved that the deadline was not attainable.

As a result, member states tasked the EAC Secretariat to constitute a team of regional experts to review the roadmap and come up with new timelines.

Revised timelines

Last year, EAC Secretariat Secretary-General Peter Mathuki told The EastAfrican that consultations on the revised timelines with partner states were ongoing with the final proposal expected to be tabled before the Council of Ministers.

“The consultations with the partner states on the revised roadmap are ongoing in which we shall form a proposal to present before the Sectoral Council of Ministers to approve or confirm the roadmap before the end of this year (2021),” said Dr Mathuki.

The Protocol for the establishment of EAMU was signed by the heads of state in Kampala on November 30, 2013, setting up a 10-year roadmap for attaining a single currency regime in 2024, the third pillar of regional integration after the Customs Union and the Common market.