EAC Cautioned Against Rushing Into Monetary Union

“The EAC is not yet ready for the move and needs to address key issues before they unite their currencies,” Lagarde said.

Lagarde is in Kenya for a three day visit to discuss the relations between Kenya and the IMF through meetings with various stakeholders.

The EAC Partner States have implemented the Customs Union and the Common Market so far but it has yet to fully realize its benefits.

The third stage is the Monetary Union and finally attainment of the EA Political Federation.

Some of the challenges, the visiting IMF boss said, include the increasing non-tariff barriers, varying economies and different tax regimes in respective countries.

“As a member of the Monetary Union of Europe, I have to tell you that it is a very exciting ambitious project,” Lagarde said.

“Make sure you learn from our mistakes and that the East African Monetary Union can even teach the Europeans how to do it right,” Lagarde emphasized.

The Monetary Union Protocol was signed last month by regional heads of states in Kampala, kicking off plans to have a common currency for the bloc within 10 years.

But the IMF chief says the countries should first come up with proper and clear convergence criteria, drawn from lessons learnt in other unions.

The single currency is aimed at enhancing trade in the East African region and also to strengthen the integration.

Regional integration has so far opened up new markets, supported the emergence of the middle class, and enabled domestic demand to become an engine of growth

By Beth Nyaga