AGENCE FRANCE-PRESSE
At a November 2013 summit in Kampala, Uganda, five East African countries signed a protocol to establish a monetary union, a first step toward creating a single currency.
Leaders from Burundi, Kenya, Rwanda, Tanzania and Uganda inked the framework to set up a single market modeled after the eurozone. In addition to using a single currency, the East African Monetary Union is designed to result in the free movement of workers, goods, services and capital within the five countries, which have a combined population of 135 million.
It would also lead to the creation of a customs union — due to be set up this year. “We now have the framework required to unlock the promise of integration,” said Kenyan President Uhuru Kenyatta. He said the union would “eliminate the cost of juggling different currencies, thereby reducing transaction cost.”
“Businesses will find more freedom to trade and invest more widely, and foreign investors will find additional irresistible reasons to pitch tent in our region,” the Kenyan president said.
However, it will likely be about a decade before the conditions required for setting up such a union are fulfilled, the group estimated. Participating countries each will have to meet macroeconomic criteria such as inflation targets. In addition, the bloc will have to establish a central bank.
The East African agreement comes 21 years after the European Union’s Maastricht Treaty was signed February 7, 1992. That agreement ultimately led to the euro in 1999.
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