DAs the East African Community (EAC) revived the process of economic integration in the 2000s, things happened very quickly. Two of the planned four pillars have been achieved, the customs union and the common market. They have turned this regional bloc of 300 million into one of the most integrated blocs in Africa. The EAC plans to issue a single currency within the next four years, the organization’s Secretary General Peter Mathuki announced on Friday (January 13).
The launch of a single currency seems to be an effective tool for integration in the region, where the many crises that have just entered the organization, economic, climate and especially the conflicts in the east of the DRC, have not yet been bypassed. “The Council of Ministers should decide this year on the location of the East African Monetary Institute and the creation of a road map for the launch of the single currency,” Peter Mathuki said at a ceremony marking the retirement of some EAC officials. . And to add: “In the next three to four years we will have a common currency. This is despite a technical working group arguing to delay implementation until 2031. EAC’s choice fell on the East African shilling. Indeed, Kenya, Uganda and Tanzania used such a currency from 1921 to 1969.
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Towards the creation of a single currency to strengthen the attractiveness of the organization
Indeed, this bold project ushers in a new era of economic unity and cooperation in the region. “The single currency facilitates business and movement of people in the region. This is in line with our goal of making the region borderless so that people can move and trade freely as envisaged in the common market protocol,” said Peter Mathuki. “Plans are at an advanced stage to hold similar consultations for Tanzania, Rwanda, Kenya and South Sudan during the 2022-2023 financial year,” he said.
According to the original schedule, the single currency was supposed to be in place by 2024, and could be East Africa is a more attractive destination for investment, finance or tourism. It should be noted that the EAC is already one of the most integrated regional economic communities on the African continent. The authorities of the EAC zone are stepping up measures and reforms to further strengthen economic integration and commercial dynamism of the region. The African Regional Integration Index (ARII), which measures regional integration across five criteria, including trade integration or free movement of people, found the region to be “the best performer on the dimension of free movement of people”. It should also be noted that macroeconomic integration is not left out.
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Trade is still weak, but steadily increasing
In any case, this announcement comes in a rather favorable context for the subregion, as trade within the seven countries that make up the EAC – Burundi, Kenya, Uganda, Rwanda, South Sudan, Tanzania, Democratic Republic of Congo – reached $10.17. billion in September 2022. The increase is mainly due to “the political goodwill of the EAC Heads of State Summit members and the easing of Covid-19 restrictions in the region” and above all the “elimination” of many non-tariff barriers to intra-regional trade. “Since 2007, cumulatively 257 non-tariff barriers have been eliminated. This coincides with the bloc’s goal of increasing intra-regional trade. […] From the 1st yearer In July 2022, imports of products such as meat, furniture and textiles available locally in the region are subject to a 35% tariff. This event aims to promote local manufacturing, value addition and industrialization,” Peter Mathuki explained in a press release. A concrete example of the warming of relations between Tanzania and Kenya in the last two years and the coming to power of President Samia Suluhu. Trade between Nairobi and Dar es Salaam exceeded 100 billion shillings for the first time. 870 million euros.
While awaiting the effectiveness of the single East African currency, the Community is moving on to Somalia, a future member that will give it access to one of Africa’s longest and most strategic coastlines. “The long Indian Ocean and Red Sea route connecting Africa to the Arabian Peninsula is a dynamic economic zone,” Mathuki said, adding that it would bring great benefits to the EAC. “The exploitation of Somalia’s blue economy resources such as fish and the expansion of its coastline are also expected to boost the regional economy,” he said.
However, the challenges are enormous: the East African Community has been hit hard by the consequences of Russia’s war in Ukraine. Indeed, a number of member states, including Rwanda, Tanzania and the DRC, each import more than half of their grain needs from these two countries. Inflation and slowing economic growth could hamper the rise of this truly African economic engine.
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