A single EAC currency is possible if all the regional countries are committed to the idea. It has certain advantages which are beyond this reply. The EAC countries are not required to fully harmonise their fiscal and financial systems in order to belong to a single currency system.
These can be left as national concerns. But what is required though is the fact that all member states need to meet a set of comprehensive macroeconomic convergence criteria and a set of institutional criteria like Central Bank, independence and greater factor mobility.
Of interest to the EAC states, with different economic levels, would be convergence factors like interest rate, exchange rate, inflation, national debts and deficits. These would need to first harmonise within acceptablebands , of say 2-4% for the exchange rate mechanism (ERM).
Even then, they would need, for instance, to irreversibly lock in a nominal exchange rate for about 2-3 years. And if there no internal economic shocks then move to a single currency system. So it is a process and it is achievable. The advantages are many.
Dennis Karangwa,South Africa
A common currency is still far away than we think. You are right –first things first. A common infrastructure system is more relevant to the people of the region than a common currency. Cheers.
Reactions to Allan Bryan Ssenyonga’s opinion, “Can we stop flogging the common currency horse?”, (The Sunday Times, May 5)