The third stage of East African Community (EAC) integration, the Monetary Union protocol, will be in place before the end of this year, officials of the partner states have announced.
"The protocol is due to finalization in November this year," said Maria Kiwanuka, Uganda's Finance and Economic Development Minister, who is also the current chairperson the East Africa council of ministers responsible for finance and economics.
Kiwanuka made public the progress of the third stage of the regional integration last Friday at the sidelines of the Sectoral Council Meeting on Monetary Union held in Kigali by finance ministers, ministers responsible for coordinating the regional integration, governors of central banks and attorney generals from all five partner states.
"What happens in November if everything goes well, people can start to reconcile foreign exchange protocols to harmonize your external taxes in cooperation for a three-year period of time," mentioned Kiwanuka.
Though the signing of the protocol is set in November, the implementation is envisaged to take until 2016. All stakeholders involved in public finance such as capital market officials, insurance regulators and taxation authorities among others participate in the ongoing discussions.
According to the official, the monetary union includes a common currency, monetary policy and implementation of existing protocols which call for free movement of people, goods and services across the borders within the bloc.
The monetary union stage also provides a central bank for all partner states namely Burundi, Kenya, Tanzania, Rwanda and Uganda.
Finance Minister John Rwangombwa explained that there is a group of experts that was jointly set up by all partner states to work on best approaches of how to go about the process.
The EAC treaty provides that the monetary union occurs when two or more states agree on a single currency for their daily transactions within the Common Market. Substantial ground has already been covered in harmonizing monetary and fiscal policies within the bloc. Meetings of governors of central banks are already taking place. Other activities include holding of pre-budget meetings, reading of the EAC budgets on the same day and harmonization of capital market development.
The monetary union protocol will be the third stage of EAC integration after that the common market protocol came into effect on July 1, 2010 with free movement of goods, persons, labor, services, capital and the right of establishment of residence. The first one to be signed has been the customs union protocol which came into effect from January 1, 2005. The ultimate stage will be the political federation.
The EAC is now working on the process to establish the single currency in a period where some countries with long experience in the practice such as Euro zone are facing financial instability, but Kiwanuka expressed confidence that they are learning a lot from such experiences.
"We are watching Euro zone very carefully to take note of what mistakes they have got into and to make sure that we have mechanisms to prevent the same happening to us," she pointed out.