Infrastructure more important than Monetary Union – expert
Its more important that East Africa works on its infrastructure than zealously pursuing a Monetary Union.
East Africa must first prioritise the improvement of its transport infrastructure and customs administration before implementing the Monetary Union protocol, a World Bank official has advised.
Mr Anton Dobronogov, the bank’s senior economist, said improvements in transport infrastructure along core transport routes and customs administration are likely to have a much greater impact on the functioning of the Common Market than a Monetary Union at the moment.
“A single currency may do relatively little to reduce the costs of trade in the region,” Mr Dobronogov said at a workshop to launch a report – Reshaping economic geography of East Africa: From regional to global integration in Kampala.
Negotiations on establishing a single currency for the East African region are in high gear, with an aim of having the protocol establishing a single currency this year.
The secretariat recently sent a team of top government officials from the five countries on a study tour to the European Union to draw lessons from the bloc on the implementation of a successful Monetary Union.
Mr Dobronogov, however, advised that the EAC should not copycat any economic integration model but rather come up with a practical paradigm, considering local conditions.
A Monetary Union is the third step in the EAC integration process, following the implementation of a Customs Union in 2005 and a Common Market in 2010.
The Monetary Union is expected to be followed by a Political Federation as the final step towards a full integration process.
Mr Harvey Rouse, the head of Trade at the European Union, said what the region currently needs is a good transport infrastructure and efficient ports to facilitate trade.
Various analysts have also condemned the speed at which partner states are moving to create a single currency, given the economic challenges and issues that each partner states have to work upon to make the union sustainable.
For instance, partner states are at different levels of economic development, export different commodities, are faced with currency swings and have high inflation rates among others.
By Faridah Kulabako, Daily Monitor
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