CONSULTATIONS on a comprehensive study of the proposed East African Monetary Union by 2012 will soon begin in the five East African countries.
Experts will conduct extensive studies to ascertain whether the East African Community could have a monetary union similar to that of the European Union by 2012.
Speaking to The New Times from Arusha, Dr.Julius T. Rotich, the EAC Deputy Secretary General (Finance) said that the consultations are part of the implementation process of integration of economic, social and political arenas of the EAC.
The Arusha-based organisation is finalising the process of hiring reputable firms that are well conversant with monetary unifications to conduct thorough research on the possibility of a monetary union.
Dr. Rotich said that the integration process has commenced with negotiations on the customs union and a common market.
“To further expedite the pace of integration, the summit of the EAC Heads of State decided that the need to fast track the establishment of an EAC monetary union by 2010 should begin now and thereafter we can look forward to the EAC political federation whose consultations have already began,” noted Rotich.
The consultations will be seeking to ascertain and confirm the current state of preparedness of a monetary union in Kenya, Uganda, Tanzania, Rwanda and Burundi, and also make proposals on the institutional framework and structure of the EAC Monetary Union.
The study will also develop a model protocol of the EAC Monetary Union that will form the basis for negotiations among the partner states, the proposed EAC Monetary Institute and among other things, design a mechanism for monitoring and enforcement of macroeconomic convergence of the partner states.
According to Dr. Rotich, the consultation teams will also review the current macroeconomic situation in the region to determine whether there is a degree of convergence among the partner states, and if not, devise ways of creating a more effective and adequate path that will lead to a monetary union and convergence.
Also to be studied are the available resources in the member countries, exchange rate volatility, proposed EAC Central Bank and the time frame required for each member state to be integrated.
Consultations in the five EAC countries are set to begin in August 2008 before an interim report containing the findings and recommendations of the study is released in December 2008.