This archive report was first published on 12 October 2019.
On November 30, 2013, the East African Community (EAC) signed the East African Monetary Union (EAMU) Protocol, a crucial step towards a common regional currency by 2024.
The protocol aimed to harmonize monetary and fiscal policies, financial systems, and statistical information among EAC member states, paving the way for a single East African Central Bank to issue a common currency.
However, less than five years to the deadline, the project is facing significant challenges. By December 2018, South Sudan, Kenya, and Burundi had exceeded their public debt ceilings, with debt levels at 64, 54, and 52 percent of GDP, respectively.
Although Tanzania, Uganda, and Rwanda were still within limits, they were also approaching the ceiling at 37, 40, and 41 percent of GDP, respectively.
According to a 2018 review by the United Nations Economic Commission for Africa (Uneca), the establishment of institutions to drive monetary convergence had been delayed due to lack of commitment from partner states.
Uneca noted that 'key decisions taken by the different regional committees to fast-track the implementation of the EAMU protocol due to more focus on relative national gains and sovereignty is one of the big challenges in the journey towards full regional integration.'
Uneca also highlighted the difficulty in complying with fiscal convergence criteria in the current macroeconomic context, where member states still face significant deficits in investment spending.
While the challenges are significant, the EAMU remains a necessary milestone towards an economically and socially robust East Africa. A more realistic timeline that takes into account the regional economy's vulnerabilities to external and internal shocks is needed to make the project work.
