EAC’s 2031 currency dream faces ugly reality

What the report says

The Observer reports that the East African Community’s plan for a single regional currency by 2031 is running into major economic and institutional obstacles. The eight-member bloc has long pursued deeper integration through monetary union, but the article says the core economies are still far from meeting the agreed convergence tests for inflation, fiscal deficits, public debt and foreign reserves. Using recent assessments from the IMF, World Bank and African Development Bank, the piece says no core EAC economy meets more than two of the four benchmarks.

The report names Kenya, Uganda, Tanzania, Rwanda and Burundi as countries with mixed performance on the criteria, while also noting that the newer members — South Sudan, the Democratic Republic of Congo and Somalia — are harder to assess because of data gaps and stabilization issues. It argues that the region’s economies are not moving in the same direction, with large differences in business cycles, fiscal positions, income levels and financial-market depth.

The Observer says these gaps could make a shared central bank difficult to manage, because one policy rate may not suit countries facing very different inflation or growth conditions. It also highlights concerns that a common currency could place higher adjustment burdens on stronger economies if convergence remains weak. The article notes that EAC central banks are still working on the roadmap, including harmonizing monetary frameworks and payment systems.

EAC Monetary Affairs Committee chair Dr. Michael Atingi-Ego is quoted saying that a single currency cannot replace macroeconomic convergence and that partner states should first meet the targets and sustain them before moving ahead. Economist Dr. Enock Nyorekwa Twinoburyo, meanwhile, says the bloc should stay committed to union but focus on managing shocks and divergence more effectively.