A brighter future for East Africa?

African and regional integration issues have always been key areas of interest for me. The East African Community (EAC) has recently contracted the European Central Bank (ECB) to help provide expertise in the set up of the East African Monetary Union (here), an ambitious regional project with the aim to introduce a common currency among Kenya, Tanzania, Uganda, Rwanda and Burundi. In short, the EAC was established in 2001 and a custom union in 2004 (here for more information). It could be argued that it represents one of the most advanced integration projects in the Dark Continent. Well, the ECB, currently facing challenges domestically that may undermine the existence of the Euro, will assist the EAC in creating the necessary conditions for the introduction of the common currency. Leaving aside empirical issues related to the Optimum Currency Areas theory, serious obstacles threaten to derail the process of integration: a common market is still to be established as well as an adequate institutional framework (e.g. an East African Central Bank), macroeconomic convergence criteria should be fully enforced, the harmonization of the legal framework in many sectors is far from being reached, and the 2007 Kenyan political crisis is not yet completely solved.

At the beginning of the EAC experience in 2001, the EAC members planned to introduce a monetary union by 2009. Then, the target date has been shifted to 2012, and now it appears clear that the process will take longer. However, the recent deal with the ECB could represent a crucial step in speeding up the integration and in creating effective institutions. Some clouds remain at the horizon, but I am confident that 2010 will be the turning point for East Africa.

Matteo F.