This will serve to transform the east african economy to operate with a common currency by 2024. Pdf monetary union for the development process in the east. Toward a monetary union in the east african community. A monetary union can also be defined as two or more countries with a single currency, or different currencies having a fixed mutual exchange rate monitored and controlled by one central bank or several central banks with closely coordinated monetary policies. Monetary union, convergence, cointegration, east african community 1. Macroeconomic shock synchronization in the east african community albert mafusire and zuzana brixiova 1 october 1 albert mafusire and zuzana brixiova are respectively senior country economist, southern africa resource center sarc and economic advisor, united nations development program in. The heads of state of the east african community signed a protocol on the establishment of the east. Jun 09, 2018 already, uganda has announced plans to reduce investment in infrastructure in the runup to joining the east african monetary union in 2024. He cares deeply about ethics in rural economics and refugee rights. Fast tracking east african community monetary union opening address by mr emmanuel tumusiimemutebile, governor of the bank of uganda, at the monetary affairs committee meeting on fast tracking east african community monetary union to 2012, kampala, 23 january 2008.
The pros and cons of an east african community eac. The east african community eac is an intergovernmental organization composed of six countries in the african great lakes region in eastern africa. The major benefits of a monetary union are the reduction in transaction costs, economies of international reserves, the elimination of exchange rate risk and regionwide. East african community eac close afrika mashariki road p. To this extent the eac countries established a customs union in 2005 and are working towards the establishment of a common market by 2010, subsequently a monetary union by 2012 and ultimately a political federation of the east african states. While the abuja treaty continues to set the overall framework and ambition for african integration, the au assembly of heads of state and government decreed, in 2012, the decision to boost intraafrican. Eac achievements ministry of east africa community and. The east african community eac was originally founded in 1967 by kenya, tanzania and uganda, a postindependence evolution of the colonial era east african common services organisation.
The heads of state of the east african community signed a protocol on the establishment of the east african community monetary union on 30th november 20. Apr 09, 2015 the pros and cons of an east african community eac monetary union april 9, 2015 by staff writer 2 with africa rapidly on the rise home to seven of the worlds fastest growing economies african leaders are looking to safeguard a future of sustained growth. Monetary union is the third of the four pillars in the eacs ambition towards regional confederation. Understanding the east african community and its transport.
The eac journey to a monetary union began with the establishment of the east african monetary union in 2015, which provided a roadmap to achieve a single currency region within 10 years by 2024. For example, the revived east african community eac1 is targeting monetary union and ultimately a federation. Introduction with the signing of an agreement for the establishment of the permanent tripartite commission for east african cooperation in 1993, the east african community eac has advanced its integration agenda rapidly. Pdf this study examines inflation rates in the five countries that belong to the east african community eac and which recently signed a.
The five east african community eac countries on november 30th signed a protocol to establish a monetary union, in a first step towards creating a single currency. African economic and monetary union including setting up of african monetary union, a single african central bank and a single african currency. Rahim daya studies political economy with a concentration in politics and development in africa at the university of california, berkeley. Figure 1, the east african community eac is a preferential trading area consisting of kenya, tanzania, and uganda. Monetary union for the development process in the east. The eamu protocol was adopted in accordance with the eac treaty and signed on 30th november 20.
The formation of the east african community eac in 1999 by the united republic of tanzania, the republic of kenya and the republic of uganda was the achievement of the trios cooperation since the collapse of the original eac in 1977. This study examined suitability of oca theory as a basis for the feasibility of proposed monetary union in east african community eac countries. Eac monetary union protocol cooperation east african community. East african community eac like other regional economic blocs is interested to form monetary union in order to access wider market and reinforced growth, which subsequently results in. Considerations for south sudan joining the east african. The eamu protocol was signed on 30th november, 20 and set the groundwork for a monetary union within 10 years while allowing the eac partner states to progressively converge their currencies into a single currency in the community.
We examine prospects for a monetary union in the east african community eac by developing a stylised model of policymakers decision problem that allows for uncertain benefits derived from monetary, financial and fiscal stability and then calibrating the model for the eac for the period 200310. After almost two years of negotiations, the five east african community countries appeared to be reaching agreement on how an east african monetary union will be formed and it was expected that a protocol would be approved at the eac heads of state summit at the end of november. Burundi and rwanda became members in 2007 while south sudan gained accession in april 2016. The east african community eac is a regional inter governmental organization established under article 2 of the treaty for the establishment of the east african community that entered into force in july 2000. The present or new eac is a revival of the original eac, a customs union that was established in 1967, at the end of the colonial era and that, for a variety of political and economic reasons, collapsed in 1977. In november 20, the partner states of the east african community eac endorsed the protocol on the establishment of the east african community monetary union the protocol committing them to full monetary union by 2024. The consultations on the monetary union, which commenced in 2009, and fast tracking the process towards east african federation all underscore the serious determination of the east african leadership and citizens to construct a powerful and sustainable east african economic and political bloc. It has since been ratified by all the partner states. The uganda government ministry of east african community affairs mandate is to steer ugandas regional integration agenda in accordance with the objectives of the treaty for. The east african community eac was originally founded in 1967, dissolved in 1977, and revived with the treaty for the establishment of the east african community the treaty establishing eac signed in 1999 by kenya, uganda and united republic of tanzania. Guglielmo maria caporale, hector carcel luis gilalana. The east african monetary union ministry of east african.
Ethical considerations of an east african community monetary. Asymmetric shocks, exchange rates, and risksharing mechanismsprepared by paulo drummond et al. The eac member states signed the protocol on the establishment of the east african community monetary. Convinced that cooperation at the subregional and regional levels in. The east african community eac has failed to meet its 2012 target of agreeing on the formation of a monetary union.
African common market and monetary union, and the negotiations towards east african federation all underscore the serious determination of the east african leadership and. Treaty for the establishment of the east african community, as amended 2008 pdf, 539 kb. Introduction analysis of the east african monetary union institute of. Dr albert musisi, the commissioner in charge of macroeconomic policy in the ministry of finance, said the move would help the country meet the fiscal deficit target of three per cent. The road to monetary union in east africa share this blog post on 30 november, the heads of state of the partner states of the east african community burundi, kenya, rwanda, tanzania and uganda met in kampala to approve the protocol for the establishment of an east african monetary union. Africa have started to seriously consider monetary union, a few of them even setting tentative time tables for the process. Policy makers in the east african community eac are committed. Ministry of east african community affairs uganda meaca. The east african monetary union is the third stage in the eac integration process.
Understanding the east african community and its transport agenda. Monetary, financial and fiscal stability in the east african. Monetary, financial and fiscal stability in the east. On the feasibility of a monetary union in the southern. Paul kagame, the president of rwanda, is the eacs chairman. The east african monetary union eamu protocol was signed on 30 th november 20.
The east african community has made an effort to bolster trade through enhancing cooperation economically, socially, and politically within the member nations. Ethical considerations of an east african community. This research aims at assessing the feasibility of a monetary union in the southern africa development community sadc. This is in line with articles 52, 82 and 151 of the treaty for the establishment of the east african community, whose goal is the eventual establishment of a political federation. Preconditions for an effective monetary union article pdf available january 2011 with 1,223 reads how we measure reads. Although resentments and tensions between states led to its collapse in 1977, the project was revived in 2001. The customs union was formally completed in 2010, and common market protocol was signed in 2009. Currently the intention is to sign the east african monetary union protocol 2012, while the date for actual implementation of the common currency is uncertain.
The east african monetary union eamu is the third milestone of the eac integration process. Pdf monetary union for the development process in the. Monetary union for the development process in the east african community. Towards a common currency in the east african community. Eac east african community united nations economic. The east african community eac has fasttracked its plans to create a single currency for the five countries making up the region, and hopes to conclude negotiations on a monetary union protocol. Customs union, a common market, subsequently a monetary union and ultimately a political federation in order to strengthen and regulate the industrial, commercial, infrastructural, cultural.
East african community regional pharmaceutical manufacturing plan of action 20122016 poverty impact assessment of the east african community regional pharmaceutical plan of action eac regional intellectual property policy on the utilisation of public healthrelated wtotrips flexibilities and the approximation of national intellectual. Towards a common currency in the east african communityeac. Pdf a common currency for the east african community. The east african community eac is a regional inter governmental organization established under. Burundi, kenya, rwanda, south sudan, tanzania, and uganda. Aug 01, 2017 the east african monetary union a monetary union is a group of two or more states sharing a common currency and with common fiscal and monetary policies. This paper empirically examines the suitability of monetary union in east african community members namely, burundi, kenya, rwanda, tanzania and uganda, on the basis of business cycle synchronization. Pdf prospects for a monetary union in the east africa. The organisation was founded in 1967, collapsed in 1977, and was revived on.
Prospective impact of the proposed monetary union in east. The east african monetary union eamu is an important stage in the process of east african community eac regional integration. Working paper 156 macroeconomic shock synchronization. The east african customs union the customs union, the first pillar of eac integration, is defined under article 75 of the treaty. East african community eac like other regional economic blocs is interested to form monetary union in order to access wider market and reinforced growth, which subsequently results in higher level of economic welfare. A memorandum of understanding for currency convertibility has since been signed, and fiscal, monetary, and. However, several regional monetary union projects are planned such as ecowas, comesa, sadc and eac and a common currency for africa is a longterm goal of the african union. Since monetary union was first discussed there have been huge discoveries of oil in kenya and uganda, and natural gas in tanzania.
According to the treaty, the eac should first form a customs union, then a common market and a monetary union, and. East african community ministry of external affairs. East africa economic outlook 2019 african development bank. In late 20 the east african community eac countries burundi, kenya, rwanda, tanzania, and uganda signed a joint protocol setting out the process and convergence criteria for an eac monetary union. Rwanda and the east african monetary union international growth. Already, uganda has announced plans to reduce investment in infrastructure in the runup to joining the east african monetary union in 2024. The pros and cons of an east african community eac monetary union april 9, 2015 by staff writer 2 with africa rapidly on the rise home to seven of the worlds fastest growing economies african leaders are looking to safeguard a future of sustained growth. The protocol was signed on 30 th november, 20 by all eac partner states. While the abuja treaty continues to set the overall framework and ambition for african integration, the au assembly of heads of state and government decreed, in 2012, the decision to boost intra african.