Tension thaws as East African states give nod to single currency - Daily Nation

Tension thaws as East African states give nod to single currency

Saturday November 30 2013

President Uhuru Kenyatta (left) greets his Tanzanian counterpart, Jakaya Kikwete, on the sidelines of The 15th Ordinary Summit of The East African Community Heads of State held at Speke Resort, Kampala, Saturday. PHOTO/PSCU

President Uhuru Kenyatta (left) greets his Tanzanian counterpart, Jakaya Kikwete, on the sidelines of The 15th Ordinary Summit of The East African Community Heads of State held at Speke Resort, Kampala, Saturday. PHOTO/PSCU 

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Relations between Kenya and Tanzania, which had grown cold in past weeks, appeared to be thawing Saturday after the Presidents of the two countries met in Kampala, where an agreement to have a single East African currency was endorsed.

Presidents Uhuru Kenyatta and Jakaya Kikwete held 45 minutes of one-on-one separate bilateral talks, where they are reported to have discussed the role of infrastructure in the region’s economic growth.

During the Kampala meeting a signing ceremony of the East African Community Monetary Union Protocol, which is supposed to culminate in a single currency for the region in a 10-year period, was held at the Speke Resort in Munyonyo, Uganda, witnessed by Members of East African Legislative Assembly, diplomats and government officials of member states.

President Kenyatta had earlier been installed as chairman of the EAC after holding formal EAC talks with host President Yoweri Museveni, Rwanda’s Paul Kagame, Tanzania’s Jakaya Kikwete and Burundi leader Pierre Nkurunzinza first at a resort on the shores of Lake Victoria.

Presenting the annual report of the EAC council of ministers, the new EAC chair and commerce and Tourism CS Phylis Kandie praised the heads of states for their strong political goodwill and unwavering commitment to the integration agenda. Ms Kandie said the framework and a roadmap for the operationalisation of the Single Customs Territory has been finalised and adopted. 

She reported that substantial progress had been made in negotiations between EAC and EU on an Economic Partnership Agreement (EPA), and negotiations on Economic and Development Cooperation finalised. 

A single currency will facilitate synchronisation and management of each country’s monetary policy, according to the protocol and, in time, lower the transaction costs of cross-border trade, thus wooing investors to the region.

The protocol will provide for a wide scope of co-operation in monetary and financial sectors among the EAC partner states, where they will be required to surrender monetary and exchange rates policies to one authority, leading to a single currency regime within the region.

The protocol will be implemented over a 10-year period, subsequently leading to creation of a regional Central Bank whose mandate is to stabilise financial prices, as well as monitor and enforce compliance with all other macro-finance matters.

President Kenyatta said the launch of the monetary union will further catalyse trade growth within the region. “Businesses will find more freedom to trade and invest more widely, and foreign investors will find additional, irresistible reasons to pitch tent in our region. Such advantages will no doubt result in increased investment and further transformation of East Africa.”

President Kenyatta called on EAC member states to give life to the integration instruments being established by abiding totally to their provisions.

“Barriers to trade, in particular, assail the spirit of the Common Market, Customs Union and the Monetary Union,” he observed.

The President also called for the removal of all obstructions in the growth of the Community, stressing the need to allow free movement of people, businesses and capital within the community to provide opportunities for generating prosperity.

The full benefits of the Community’s trade initiatives will only be realised if the business environment is inclusive. Businesses and traders in the small and micro-enterprises sector need to be enabled.

President Kenyatta regretted dilapidated infrastructure which has denied the region’s citizenry their development aspirations. He pointed out that effective roads, railways, aviation, port, ICT and energy are necessary to support the vigorous enterprises within a forward-looking Community. 

“Although infrastructure demands intensive investment of funds, it is, nevertheless, an investment which makes the difference between progress and failure,” he said.

The President commended the council of ministers and the EAC secretariat, led by the Secretary-General Ambassador Dr Richard Sezibera, for their excellent work in entrenching the integration process.

Kenyatta University political scientist Dr Joseph Magut said that the EAC position comes with its own trappings in terms of visibility clout for President Kenyatta at regional levels, continentally and internationally.

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“President Kenyatta will now wear both hats of being the President of Kenya and EAC boss. The about 200 million people in the region alone give him sufficient clout. It is a boon for him,” Dr Magut said.

“Unlike former President Kibaki who was laid back, President Kenyatta could take advantage of the position and build a legacy for himself.

He could also solidify the relationship between Kenya and other EAC partner states,” Dr Magut said.

The Summit also directed that the internationalised new generation East African passport be launched by November 2015.

Meanwhile, High Court Judge Isaac Lenaola was appointed Deputy Principal Judge of the East African Court of Justice.