East Africa launches bid for monetary union

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Addis Ababa, 3  Decmber 2013 (WIC) - Five East African countries on Saturday signed a protocol to establish a monetary union, in a first step towards creating a single currency, AFP reported.

At a summit in Kampala, leaders from Burundi, Kenya, Uganda, Tanzania and Rwanda inked the framework to set up a single market modeled after the eurozone. Besides ultimately delivering a single currency, the monetary union is designed to result in the free movement of workers, goods, services and capital within the five countries with a combined population of 135 million. It would also lead to the creation of a customs union, due to be set up by 2014.

Kenyan President Uhuru Kenyatta said “The signing of the East African Community monetary union protocol is the logical combination of all our integration efforts.” “We now have the framework required to unlock the promise of integration,” he added. He said Nkurunziza said the union would “eliminate the cost of juggling different currencies, thereby reducing transaction cost”.

“Businesses will find more freedom to trade and invest more widely and foreign investment will find additional irresistible reasons to pitch tent in our region,” said the Kenyan president. However, it would be about a decade before the conditions required for setting up such a union were fulfilled, the group estimated.

Participating countries would each have to meet macro-economic criteria such as inflation targets. In addition, a central bank for the bloc would have to be established.

The east African agreement comes 21 years after the European Union's Maastricht Treaty was signed on February 7, 1992. That agreement, which came into force on November 1, 1993, ultimately led to the euro in 1999.

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