Kampala: Experts have urged for clear policies on how the proposed East African Central Bank will be funded, and how accounting and reporting standards will be harmonised as the region plans to adopt a single currency. "Until concrete means are found to provide central banks with clear and efficient ways to assess trends and developments in domestic and external economies, it may be challenging to proceed with the 2012 deadline," said Bank of Uganda governor emeritus Leo Kibirango in an interview.
"The monetary union would render all players thinking East Africa and would restrict independent action in pursuit of national economic objectives."
He explained that there is risk that smaller states with marginal projects could be sidelined in preference for states with more robust proposals in the absence of clear policies.
State leaders in the East African Community (EAC) recently announced 2012 as the year of a common currency in Tanzania, Rwanda, Burundi, Kenya and Uganda, but central bank leaders in these countries may still lack the tools to implement the monetary union.
The union envisaged would require the introduction and operating of common currency and full integration of financial markets, which may require a regional institution (the East African Monetary Institute) to issue currency and guide monetary policy.
A common market was to be established on July 1, 2010, providing for free movement of goods, labour and services among the five East African countries, but did not meet its deadline.
A monetary union would remove the costs of transacting in different currencies and the risk of adverse exchange rate movements for traders and travellers alike within the region.
Kenneth Masiga, an export and documentation manager at Lakeland holdings, a coffee processing and export firm, said the adoption of a single currency was long overdue and that no efforts should be spared to that end.
Kassim Omar, the Uganda Clearing Industry and Forwarding Association chairman, said it was imperative that individual East African currencies first trade at level terms against the dollar before a regional currency is adopted.
"If there is harmony between the values of the different East African currencies, a single regional currency would cause extreme poverty in countries where the value of the country's currency is very low against the dollar. Better yet, why don't we trade in dollars and become global instead of just being regional," he explained.
Omar said there was need for clear benchmarks to achieve uniform economic development.