East African bloc approves monetary union deal

PUBLISHED : Monday, 02 December, 2013, 5:30am
UPDATED : Monday, 02 December, 2013, 5:30am

The leaders of five East African countries have signed a protocol laying the groundwork for a monetary union within 10 years that they expect will expand regional trade.

Heads of state of Kenya, Tanzania, Uganda, Rwanda and Burundi, which have already signed a common market and a single customs union, say the protocol will allow them to progressively converge their currencies and increase commerce.

Meanwhile, the East African Community (EAC) nations aim to harmonise monetary and fiscal policies and establish a common central bank. Kenya, Uganda, Tanzania and Rwanda already present their budgets simultaneously every June.

The plan by the region of 135 million people, a new frontier for oil and gas exploration, is also meant to draw foreign investment and wean EAC countries off external aid.

"The promise of economic development and prosperity hinges on our integration," the Kenyan President, Uhuru Kenyatta, said. "Businesses will find more freedom to trade and invest more widely, and investors will find additional, irresistible reasons to pitch a tent in our region."

Kenya has launched a US$13.8 billion Chinese-built railway to cut transport costs, part of regional plans that also include new ports and railways.

Landlocked Uganda and Kenya have discovered oil, while Tanzania has vast natural gas reserves that need improved infrastructure and foreign investment so they can be exploited.