Eurozone is Struggling While East Africa Insists on its Monetary Union
The crisis in the eurozone does not bridle East African's desire to create its monetary union. Despite recent and persistent problems of our single currency and the dire predictions by respected economists and even politicians, a collapse of the Euro, the region of Eastern Africa (East African Community) continues its journey toward a monetary union.
After recreating East African Community in 2000, Kenya, Tanzania, Uganda, Rwanda and Burundi embarked on a fast race towards integration of the area in 2012 and this year should see the achievement of last step on: monetary union. In the late 90s a political will was shot with more conviction and strength to rebuild on a new political and economic integrated area. After the customs union of 2005 and the common market in 2010, this year should reach the top goal of the single currency. The conditional is a must, given the international crisis and the very difficult situation of the Euro, now the reference point of the journey of the African. The single currency would eliminate the costs of transactions in different currencies and the risk of adverse movements in the exchange rates for merchants and travelers, as well as better tax policy, economic and monetary co-ordinated, integrated and controlled.
The integration process has received support and criticism from many quarters. Although the importance of a monetary union has not been questioned, and is concerned about what is now discussed is the timing. The date of 2012, scheduled for some time, now is a lot of conflicting voices, seeking to slow or even postpone it. Some critics say that the process is unnecessarily accelerated, which can lead to fundamental problems in the future. "Some principles of the Treaty are confused - Ochan Betty said, a Parliamentary of Uganda. We must not run. The issue of monetary union needs to resolve other issues as a priority even as the movement of labor and capital". Instead, according to David Nalo, EAC Chairman, "watching the problems in the Euro-Zone we can say that our integration should proceed". Even Richard Sezibera, the EAC Secretary General, provides that "the process is going on well and invited the finance ministers and governors of central banks to step up work with the various fiscal and monetary committees" and called for "the strengthening of the fiscal is crucial for monetary union. "
The EAC today, according to data from the International Monetary Fund, has achieved a strong and steady growth over the past two decades. The pace of growth has increased since the early 90s, in line with the trend of other countries in Sub Saharan Africa, but recently, since 2005, this area has grown much faster, and has almost doubled rates. The IMF records an annual per capita growth averaged nearly 4 percent over the last 6 years. The African continent has the ambitious goal of reaching the level of middle-income states by 2020. Some parameters and indicators had been put to achieve and maintain this goal, such as the deficit and inflation under control by 5%. With a population of over 120 million inhabitants, an average literacy rate of about 75-80% of the population, annual per capita income of about $ 1,000, the EAC has a long way to go. For this there are the voices that would slow down the process of monetary union, in the light of what is happening in Europe. The Dean of the Faculty of Economics and Management at the National University of Rwanda, Prof. B. Rama Rao, has warned that if they want to partner countries to effectively benefit from the monetary union need to learn lessons from other economic communities: "the East African Community to have a strong single currency should take lessons from 'Europe and see how the euro works, "he said. In an interview with New Times, Murenz Godfrey, a businessman, said it would be important to the business community having the single currency "will be disloyal to the business community delay the establishment of a single currency, because we must always face the problem of exchange of money before you travel to other countries, "he said.
Continued on the next page
Follow Technorati