East African Community, a five-nation trade bloc that aims to have a monetary union in 2012, said that problems in the euro area will serve as a lesson but will not discourage its move to a single currency.
East African Community (EAC) comprises Uganda, Kenya, Tanzania, Uganda and Burundi. It already has a customs union, and a common market is due to take effect in July. After the monetary union, it eventually aims to have a political federation.
Juma Mwapachu, EAC’s secretary general, said the bloc was watching events in the European Union, hoping to learn from the Greek debt experience, and avoid similar pitfalls.
“The lesson for us is not that we should slow down our movement towards the monetary union, but really to ensure that we do not find any of our member states, falling into the kind of experience that Greece has gone into,” Mwapachu told Reuters.
The Greek debt crisis has sparked huge instability in the 11-year-old Euro currency and led to demands for EU states to work much harder on coordinating their economic policies to bring their finances into check.
“I think the EAC region has got to be concerned that the euro area is going through this kind of turbulence. But then it really goes down to point out how critical it is that you do have effective macroeconomic convergence,” Mwapachu said.
EAC has a gross domestic product of $73.3 billion and a population of close to 127 million.
Speaking earlier at a news conference during the launch of a World Bank report on doing business in the EAC, Mwapachu said the common market would start on schedule, but said some laws, like those on labour and movement of capital, had to be reformed to smooth the process.
“We are going to begin the process from July 1. It will demand quite a bit of reforms at national levels and maybe even at the EAC level,” he said.
Pic: President of Uganda