CURRENCY DEVALUATION AND FLUCTUATIONS MAY FAST TRACK COMMON CURRENCY
The present slide in the currency values of Uganda, Kenya and Tanzania, though notably not in the more austere Rwanda, has given rise to hope that Central Bank chiefs and economists may be able to persuade their political masters that the time is ripe to make a final push for a common East African currency.
While eyeing the events in Europe, where the precarious situation of countries like Greece, Spain, Ireland and Portugal have put pressure on the Euro, regional economists privately say that had it not been for the Euro those countries could have gone bust already as the other European countries might not have been under such pressure to arrange for bailout packages.
The same source also said: For East Africa to become one economic zone, to promote free flow of goods within the region, a single currency will make this easier as exchange transactions between our currencies, or worse the use of a foreign hard currency like the Dollar for payments, can then be expired and a lot of savings generated. As more of our citizens work across the region they can also send money home without losing on exchange transactions. Our banks must open up too and stop making transfers from one member country to the next a matter of going via New York or London. They must establish a mechanism that transfers within the region should be as simple as transfers within a member states banking system.
All this will be simplified by the use of a common currency unit which in itself can lead to greater integration with passports looking the same and just showing the issuing country as an identifying feature, driving licenses, kipandes [local word for ID cards] and a lot more. Insurers could follow by offering coverage for cars extending across the region, like in the old days when scheduled territories were on the documents to explain the validity. East Africa has a huge economic potential, and our tourist industries will also benefit from using one common currency, it will attract interest to explore our neighbours attractions also.
The envisaged monetary union is part of already existing protocols between member states and officially due to be in place by the end of 2012, though doubts on the time frame have emerged repeatedly over past years. The current runaway inflation and sliding currency values however may now prompt timely action to bring about a more stable common currency unit for the benefit of the regional economies overall. Watch this space.