Recently, member states of the East African Community (EAC) discussed the need to accept regional currencies as a means of payments in cross-border trade.
This means traders will now transact without having to convert their respective currencies to US dollars and back to their own – a process which was not only tedious but time consuming and costly.
On Monday this week, while opening the Global African Investment Summit (TGAIS) in Kigali, President Paul Kagame called on African governments to be time conscious in the implementation of regional integration projects, highlighting the enormous cost that is incurred when such projects are delayed or stalled.
This brings to mind English Playwright, William Shakespeare, who once said “better three hours too soon than a minute late”.
The move to accept regional currencies as a means of payment will not only be timely but will see the region’s member states save a substantial amount of money that was previously lost through exchange.
Implementing this will cushion our local currencies’ against drastic fluctuation against foreign currencies as it has been before.
The move to trade in national currencies will protect them from adverse vulnerability of the local currencies in the member-countries of the bloc.
Experts attribute our struggling currencies to keep afloat against the US Dollar to a globally strengthening dollar and reduced foreign exchange inflows from tourism, trade and agriculture.
The global currency and exchange movement remains one of the most important developments in human liberation since the World War Two.
It evidences a move toward economic freedom, which is every bit as important as political and religious freedom.
The proliferation of national local currencies demonstrates the intensifying need which people feel for satisfaction of basic human needs and greater control over their own destiny. It provides a hopeful sign that we are not powerless in the face of increasing concentration of money and power, and the rapid globalisation of capital and markets.
Today, global trade is dominated by the dollar, which often results in the volatility of a particular currency in the currency market in the developing countries, causing huge economic and trade losses.
The developed countries, on the other hand, are not adversely affected as they do everything possible to protect their currencies.
Even though the move by the East African Community has come a bit late, it is a bold attempt to bring back control of one of the fundamental means of economic prosperity – the money supply.
There is no way we can prosper as a region trade-wise if our currencies are still mountains apart and look strange in the face of our own people on the other side.
It is a fact that our local currencies have always faced a very rugged terrain within the region. A friend of mine observed while walking from one place to another in search of exchange for one of the EAC partner state’s currencies.
Surprisingly, those in forex bureaus mostly do not give a glimpse at these currencies – the foreign currencies they prefer are the Dollar, Pound or Euro. My friend had an experience where even some of the formal financial institutions were reluctant to exchange the currency he had.
He further observed that the situation gets worse as one moves away from the main cities of East African nations to the hinterland.
It can be argued that, until we prioritise and promote the local money supply – until money can be made when using our own regional currencies – then many regional integration initiatives, like neutrality and self-sufficiency, will be fundamentally skewed.
For instance, free movement of people and goods that’s already happening across the EAC region is more efficient when there are no challenges of using a local national currency in another East African member state.
An intricate social network is reinforced as a by-product of members meeting to value and exchange each other’s economic tools. In an indirect way, it may be exactly these social benefits, which determine common success in the long run.
Promoting use of local currencies across the now six-nation bloc will add value to the much-desired common political front and possibly the realisation of a single currency for the East Africans.
In another way, local currencies can offer cheap credit on a different qualitative basis to the banks’ credit algorithms; back local initiatives, create opportunities and unlock value that would be ignored by the return-on-capital.
In a nutshell, using local currencies in regional trade will provide real support to our local economies and the unique goods and services we provide. It will as well boost local commerce, safeguard jobs, keep our regionally owned businesses thriving and promote the production of local goods and services.
Therefore, this initiative must be fast tracked, not only for the benefit of traders but for the sake of all the East Africans who move around in search of opportunities and work related purposes.