East Africa Community Common currency: The Greek way?

Excellent move walioenda huko kwani unification of currency is dangerous tutakuwa drag into a black hole of uncertainty. We should unite in the East African community for the things that we may benefit. Ardhi, sarafu yetu na madini are off the hook zibakie kwa watanzania na watanzania pekee.
 
Thinkers,

Ninachojua ni kwamba tuliahidiwa kwamba kufikia 2012 tutakuwa na sarafu moja katika East Africa.

Je, kitendo hicho kitatokea lini na tarehe gani?

Maana kama leo tumeshakata siku 51 za mwaka 2012 na sijasikia lolote.
 
Thinkers,

Ninachojua ni kwamba tuliahidiwa kwamba kufikia 2012 tutakuwa na sarafu moja katika East Africa.

Je, kitendo hicho kitatokea lini na tarehe gani?

Maana kama leo tumeshakata siku 51 za mwaka 2012 na sijasikia lolote.

EAC monetary union either dead or under limbo! I dont see anyway the path to monetary union acrossing the jungle 'macroeconomic convergence' and 'flexible factor mobility' which ar pre-requisit.
 
Economic experts have warned of tough economic consequences if the East African Community rushes the establishment of the single currency owing to political pressure.
In an interview with The New Times, the former Minister of Finance and Economic Planning, Prof Manasseh Nshuti, said establishing a single currency is a technical matter that should not be politically driven.
Last week, a high level meeting in Kigali discussed the establishment of a Monetary Union, including the regional central bank that would be in charge of controlling regional financial institutions.
But Prof. Nshuti said it was important for the region to learn all the intricacies involved.
He highlighted that the region still largely depends on donations from developed countries to sustain their economies, which, he said, might hinder the process.
"It's a good idea whose time has not yet come due to the environment we are in.
We have to be economically independent otherwise the donors will control the currency,"
Nshuti said.

He pointed out that donors will have to put conditions for them to continue providing support to the region meaning that they will be determining the export and imports for the region, creating more economic imbalances among partner states.

"We are all agro -countries we are not industrialised meaning that it's difficult to control the inflation, especially the imported inflation on oil and other products."

Rwanda has tried to keep inflation on single digit. Last month it stood at 5.8%, Kenya was at 6.1%. In Uganda, the annual inflation rate for the year ending in August 2012 declined to 11.9% from the 14.3% registered last year in July according to the statistics from Ugandan Bureau of statistics.
Burundi has the highest inflation rate in the region with 17.6 percent while Tanzania's current rate is at 14.7 percent and according to the expert, for the region to have a stable currency, at least the inflation rate should be between 3-4 percent which is still a challenge.
The Monetary Union issue has always been receiving criticisms from various parts. Recently in Tanzania, regional and international economic experts gathered to discuss about the single currency and some experts seemed to criticise the move.
Michael J. Fuchs, a World Bank financial sector and private development advisor, African region, said the EAC should instead focus on other issues, like developing infrastructure, instead of wasting time on a Monetary Union that will not deliver development to the region.

"It's totally irrelevant for the East African Community countries to have a Monetary Union now; it doesn't make sense, they should first focus on developing infrastructure," he told The New Times.

"They will have this Monetary Union but it will not contribute positively towards the community; look at the one in the central African region, it has done nothing for them."
However, despite the criticism EAC negotiators have always shown optimism to achieve the currency.
According to Dr Thomas Kigabo, the Rwandan chief negotiator, by the end of this year, all technical negotiations to establish a single currency for the East African Community (EAC) will be complete, adding that the member states were eager to put up the currency.
"We hope by end of November this year all the negotiations by the High Level Task Force (HTLF) will be complete," he said.
HLTF is comprised of senior officials from the Partner States' Ministries of Finance, Planning and Economic Development, East African Community Affairs, as well as Central Banks, Capital Markets Authorities, Insurance and Pensions Regulatory Agencies, and National Statistics Agencies.
After the implementation of the Customs Union and the Common Market, the Monetary Union is the next and third stage in the integration process. The ultimate step will be the formation of a political federation.
EAC Heads of State had set a 2012 deadline for the envisaged Monetary Union though it's not known if it will be achieved in the targeted period.
 
hicho tu ndicho wanachokiona ni kigumu kutekelezeka,ardhi yetu ya tz je mbona hawaoni ugumu wake kutaka kuitwaaa,wanachukulia poa poa tu eeeeh
 
EU has spent more than 40 years to adopt the Euro. This to us is really an uphill task.
 
TUESDAY, DECEMBER 04, 2012

Adoption of a common currency in the East African Federation seems inevitable based on the intense discussions and movements on the ground. As citizens and stake holders in the federation, we have a civic duty to advice and even challenge our governments when their actions seem to be going off-course. Catastrophic political and economic consequences underneath the monetary consolidation have particularly compelled me to trumpet my fear much louder in anticipation that our leaders will hear our voices.


I am not trying to paint a dooms day economic scenario; I am rather, trying to reiterate the reality from today's vantage point. In short, our countries are not ready for monetary integration due to the severe and serious political and economic differences that needs to be harmonized. Kenya for example is in a serious political transition following its 2007 elections chaos. Its constitutional implementation has a long way to go before the country could see political stability. Tanzania on the other hand is battling its integration (Tanganyika and Zanzibar) headache, whose fate is not known.


The countries have different economic policies and challenges. Kenya, Uganda, Rwanda, Burundi and Tanzania are facing enormous economic difficulties of their own including varying inflation rates. Based on Tanzania Bureau of Statistics, the country's inflation rate as of October 2012 stood at 12.9%. That of Burundi is almost 18% while Rwanda's stand at around 5.8%. In other words, to have a safe and stable currency, inflation in respective countries must stay in the range of 1.5 % through 3.0%. These numbers acceptable in the economic circles, are unlikely to be attained in the current status of affairs within the region

East African member nations are immensely divided on Immigration issues. While Rwanda has opened its doors to regional immigration, In order to tame unemployment, Kenya and Tanzania have made it exceptionally difficult for foreigners to obtain resident and work authorization. Tanzania work permits are extremely costly, while Kenya permits are straight discriminative, requiring applicants to be 35 years of age, and be able to make at-least $24,000 a year. These are serious policy differences likely to hamper a smooth monetary consolidation between the member states

The initial East African Community quickly crumbled upon its creation, simply because member states lacked cohesion. Frequent feuds among member nations, aggravated by quest for hegemony status over the union, led to the sudden-collapse of the union. Half a century later, our countries are more polarized than they were a few years after their independence. Solution to the instability in the neighboring DRC, chronic corruption in Burundi, tribal and ethnic differences in Kenya both crucial and instrumental factors in establishing a stable currency; do not seem to be in sight.

Monetary integrations require essential harmony and stability in the context of economic, social and political The proposed monetary union is an imitation from the West. Despite the European Economic Community, and now the European Union's fifty-five year existence, its common currency, the Euro, only came into existence seventeen years ago. And out of the twenty-seven member countries, only seventeen member states adopted the EURO as their currency. Britain opted out and maintained its pound, and thus far remained out of the Euro-zone crisis.

It took the Europeans hundreds of years before they could form the European Economic Community in 1957, and subsequently EU in 1993. On the other hand, the East African Community was hastily formed in 1967, just to collapse ten years later in 1977 due to serious political differences, which remains unresolved. In retrospect, watching the economic tremor in the Euro-zone, one will logically question whether our political and fiscal leaders are watching the movie from the same screen and perhaps sense something so scary in their forward march into an economic dark-hole in the name of monetary union.


Greece is currently on economic hospice care, and so are Portugal and Spain; requiring the debt laden European Central Bank to bail them out. The Euro-zone crisis has proven to be a great burden and a nightmare to the single stronger German economy. The Europeans have no uniform fiscal rules. Their bond-market enforcers have not always been attentive to enforce the needed rigid fiscal codes of conduct; they have varying risk of sovereign default across the Euro zone. The EU member states have uneven recovery plans, with each central bank trying to maintain laxity in its tax system.

During the formation of the Euro, it designers assumed that, without rules, fiscal mistakes by one member state would impose cost on all. German's initial worry, that unchecked deficits would become a burden on the EU central bank to monetize public debts, and financially sound nations would be forced to bail out the spendthrift and debt-holics like Greece. A prophecy that came to be Germany's nightmare

After more than half a century of fiscal and economic study, the Europeans have no cure to their economic nightmare. The hasty East Africans, monetary union is a catastrophe in the making because its member countries have no clear fiscal policies to save their hailing, donor dependent economies. Leave alone bailing out their counterparts should the Euro-zone style fiscal crisis emerge. In short, the East African Federation is not prepared to handle the bigger problems of bailing out member states in case of financial crisis. Kenya for example will be in position to bail out Tanzania, should her southern neighbor run into a fiscal collapse. Neither will Rwanda

Need for uniform wages, relative to the cost of labor among member nations, under the same currency, is a big challenge that requires many years of study and experiment before it can be implemented. Loss of national pride and sovereignty are other serious problem that have not been fully addressed and requires national consensus or referendum. I am therefore urging President Kikwete, Hon. Samwel Sitta and our legislatures in the East African Legislative Assembly to earnestly deliberate on these facts before committing our nation into a disaster.

The list of potential problems related to the proposed single currency is long. The regional integration should however, continue only, with free movement of goods and people. Until internal political, economic, social division and mismanagement of resources within member states are resolved, until clear fiscal policies are put in place to address all possible eventualities, it will be in the best interest of our respective countries to tread cautiously into this fiscal and economic tremor or a trap called East African Common Currency.



Mungu Ibariki Tanzania
John Mashaka, (Mwanza-Tanzania)

Source: MICHUZI BLOG
 
I totally disagree with the so-called free movement of people and goods. Essentially, if we need a health union we should aim at Zambia Mozambique and DRC instead of those small and landless countries whose aim is to plunder our land. If you look at the populations of those countries you'll understand how big is the danger we are creating. Their total population is twice as our population while their land mass is just a third of ours. What is the logic of uniting with such loss-making outfits?
 
In East Africa, next on the list is
Burundi at number 47 with 289 people per sq km,
Uganda at number 84 with 136 people per sq km,
Kenya at number 137 with 66 people per sq km, and lastly
Tanzania at number 155 with 49 people per sq km.

In other words, Rwanda's population density is nearly 10 times that of Kenya.



The fertility rate in Rwanda has however been coming down. Currently, women in Rwanda have an average of 4.6 children, down from 6.1 in 2005.

We should stay away from them neighbours who are the LAND GRABERS

Jamani ANGALIENI RATIO ya BONGO... TUNA ARDHI lazima tuiringie!!!
 
A very good analysis , japo kiukweli viongozi wetu wa Tanzania kila nikiwaangalia kwenye macho yao sioni kama wanaamini wala kukipenda wanachokisema , ni kama vile wanazuga tu ili waonekane nao wamo , they are not serious at all .
 
......tatizo la serikali yetu na wachumi wetu kila kitu wanafanya siri...........they look Greece with a side eye............trust me there a lot of lessons pale..............nakubaliana na wewe Mkuu inabidi watu wajifunze kisawa sawa hizi monetary unions.....faida na hasara zake na jinsi ya ku-regulate ikibidi...............
Mkuu at least we were visionaries back then in 2010!!
 
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