The eac integration process is anchored on four pillars namely customs union, common market, monetary union and political federation. The east african community eac is an intergovernmental organisation composed of six countries in the african great lakes region in eastern africa. Currently the intention is to sign the east african monetary union protocol 2012, while the date. In 2007, eac membership was extended to burundi and.
Considerations for south sudan joining the east african monetary union christopher adam, charles data alemi, and astrid r. The eamu protocol was adopted in accordance with the eac treaty and signed on 30th november 20. Kenya, tanzania, uganda, rwanda and burundi will merge currencies gradually over the next ten years to boost trade. Background to the east african community eac the east african community eac is the regional intergovernmental organization of the republic of burundi, kenya, rwanda, tanzania and uganda with headquarters in arusha, tanzania. Background to the east african community eac and key. This will serve to transform the east african economy to operate with a common currency by 2024. East african community eac states are aspiring for a single eac currency by 2024. Eac achievements ministry of east africa community and. Full political con federation 20 wako committee, 2004.
Having signed the monetary union protocol, last year, all partner states were expected to have ratified the protocol by. On november 30, 20, the heads of state of the east african community signed the monetary union protocol in kampala. The eac is approaching the highest stage, having ratified the protocol for a monetary union, but igad is farther behind. The organisation was founded in 1967, collapsed in 1977, and was revived on 7 july 2000. The eac has now concluded the protocol for the establishment of the east african. A currency union also known as monetary union is an intergovernmental agreement that involves two or more states sharing the same currency. I n t e r n a t i o n a l m o n e t a r y f u n d the african department toward a monetary union in the east african community asymmetric shocks, exchange rates, and risksharing mechanisms. Cooperation east african community germany support. Considerations for south sudan joining the east african. Protocol on the establishment of the east african customs union, 2004. East african nations agree on monetary union news al. East africa economic outlook 2019 african development bank.
However, this is a moveable date as the most important factor is that the acceding states fulfil the convergence criteria. Towards a common currency in the eastern african community. Protocol on the establishment of the east african customs. And it is probably easier for manual workers to move across borders. East african trade bloc approves monetary union deal reuters. The customs union is the first regional integration milestone and critical foundation of the eac. Years of anxiety within the regions fi nancial circles have now come to an end, paving the way for the process of implementing what promises to change the face of east africa. It follows ratification of the protocols for a customs union 2005 and. Community monetary union the protocol committing them to full monetary union by 2024. The origins of the east african community eac can be traced back to the long history of trade, administrative, and sociocultural ties between partner states, stretching back nearly a century. Eac endorsed the protocol on the establishment of the east african. Kenya school of monetary studies ksms research centre abstract the five east african community eac states have stepped up the push for the formation of a monetary union. The advantage and disadvantage of joining a monetary union may arise at the.
East african community eac close afrika mashariki road p. Protocol on the establishment of the east african monetary union. Pdf a common currency for the east african community. Currently the intention is to sign the east african monetary union protocol 2012, while the. This is to enhance the efficiency and performance of the custom union and the common market. The customs union protocol is the first pillar under the eac integration. The proposed institute will carry out the preparatory work that will guide the region towards formation of an east african monetary union and its supporting institutions. South sudan, the eac and the east african monetary union. The protocol aims to harmonize monetary and fiscal policies and establish a common central bank for the east african community. Burundi, kenya, rwanda, south sudan, tanzania, and uganda. On 30th november 1999, the treaty of the establishment of eac was signed and on 7th july 2000, it became operational. Several milestones have been realized under the eac pillars. Countries are expected to attain headline inflation of a maximum eight per cent, a fiscal deficit including grants of not more than three per cent of gdp, a public debttogdp ratio of 50 per cent and forex reserves of at least 4.
Section 4 discusses economic convergence criteria for joining the eamu, and. Toward a monetary union in the east african community. East african community ministry of external affairs. The east african community eac was originally founded in 1967 by kenya, tanzania and uganda, a postindependence evolution of the colonial era east african common services organisation. The signing of the protocol represents a further step. It is thought that a monetary union, with the absence of currency risk, provides a greater incentive for trade. Eac peace and security protocol eac customs union protocol eac common market protocol eac monetary union protocol. Article 14 of the protocol to the treaty establishing the african economic community relating to the free movement of persons, right of residence and right of establishment discusses the free movement of.
A gppp analysis to the eac monetary integration process. A memorandum of understanding for currency convertibility has since been signed, and fiscal, monetary. Protocol and the statute annexed to it shall enter into force on. Pdf kenya, tanzania and uganda signed the treaty for the. Pdf on jan 1, 2018, hansheinrich bass and others published a common. Currently, two monetary integrations in africa are in place.
Considering that the constitutive act of the african union established the african monetary fund in its article 19c. The eamu protocol was signed on 30th november, 20 and set the groundwork for a monetary union within 10 years while allowing the eac partner states to progressively converge their currencies into a single currency in the community. Making the most of the common market on the road to a monetary union is being jointly organized by the east african community eac secretariat, the european union eu delegation in tanzania, and the african department of the international monetary fund imf. Although resentments and tensions between states led to its collapse in 1977, the project was revived in 2001. This will ensure the benefits of joining the union will exceed the cost, and it has been boosted by the ratification of the protocol by member states. To this extent the eac countries established a customs union in 2005 and are working towards the establishment of a common market by 2010, subsequently a monetary union by 2012 and ultimately a political federation of the east african states. Eac partner states established a customs union in 2005, a common market in 2010 and signed the east african monetary union eamu protocol in 20 and are progressing towards implementation of the monetary union protocol, and ultimately a political federation of the east african partner states.
Economic community of west african states wikipedia. It has since been ratified by all the partner states. Comesa is also work ing toward a monetary union by 2025, but progress in the prerequisite macroeconomic conver. Burundi has joined rwanda and tanzania in ratifying the east african community monetary union protocol. The east african monetary union eamu is the third milestone of the eac integration process. South sudan, the eac and east african monetary union. South sudan will also lose its relatively valuable pound, melting jubas. The east african monetary union eamu protocol was signed on 30 th november 20. Understanding the east african community and its transport. School of economics kenyatta university kenya okara g. Eac eyes single currency by 2024 trademark east africa.
The road to monetary union in east africa share this blog post on 30 november, the heads of state of the partner states of the east african community burundi, kenya, rwanda, tanzania and uganda met in kampala to approve the protocol for the establishment of an east african monetary union. The five east african community eac countries on november 30th signed a protocol to establish a monetary union, in a first step towards creating a single currency. Feasibility and implication of the east african community monetary union. Unlike in the european union where all the member states are obliged to join the monetary union, the eac has instituted variable geometry. Considerations for south sudan joining the east african monetary. To achieve these objectives, the key building blocks are the customs union, common market, monetary union, and ultimately the political federation. It is intended to provide a followup to the 2012 regional. The influence of east african community customs union on. Towards a common currency in the east african community. A gppp analysis to the eac monetary integration process muthui j. A politicolegal framework for integration in africa. The eac customs union protocol came into force in 2005 and the implementation of the common market protocol commenced in 2010.
It is necessary to ensure the existence of adequate pre. The east african community common market and possible monetary union customs union and cet 2005 full implementation 2010 single market 2010 full implementation 2015 protocol for monetary union 20 implementation by 2024. Protocol on the statute of african court of justice and human rights, 2009. In late 20 the east african community eac countries burundi, kenya, rwanda, tanzania, and uganda. Kampala reuters the leaders of five east african countries signed a protocol on saturday laying the groundwork for a monetary union within 10. However, several regional monetary union projects are planned such as ecowas, comesa, sadc and eac and a common currency for africa is a longterm goal of the african union. The east african monetary union ministry of east african. Haas policy brief given where the economy is at the moment and its prospects over the next two to three years, south sudan is highly unlikely to be ready to participate in the monetary union at inception, assuming this.
In september 2018 a committee was formed to begin the process of drafting a regional constitution, and a draft constitution for a. These states may not necessarily have any further integration such as an economic and monetary union, which would have, in addition, a customs union. This protocol allows for free movement of people between countries that are part of the african union. Toward a monetary union in the east african community african deparment.
The monetary union eamu protocol is the third pillar of eac integration. The east african community eac is a unique regional entity that was established in 2000 with a clear road map for establishing a customs union, common market, monetary union, and, ultimately, a political federation. Tanzania, kenya and uganda are determined to merge their respective shillings with rwanda and burundian francs to form the single legal tender for the bloc in the next seven years. The eac in its present form was formally created to include kenya, tanzania, and uganda in 1999. The highlevel conference on regional integration in the eac. The heads of state of the east african community signed a protocol on the establishment of the east african community monetary union on 30th november 20. The eac journey to a monetary union began with the establishment of the east african monetary union in 2015, which provided a roadmap to achieve a single currency region within 10 years by 2024. This protocol also features the statute of the east african monetary institute and the east african central bank. Exploring the attainability of a supranational african union. Nonetheless, joining a currency union may entail benefits if the exchange rate is. Paul kagame, the president of rwanda, is the eacs chairman. Feasibility and implication of east african community monetary union.