Common E. African currency to boost firms-EU


2006-03-15 10:32:26
By Times Reporter
The East African Community’s plans for a single currency will boost firms by easing transactions among member countries, a European Union official said on Wednesday.

The East African Community (EAC) customs union, which came into effect in 2005, comprises Kenya, Uganda and Tanzania.

The countries plan to have a monetary union in 2009.

’I am a believer in the single currency. I think it has brought us in Europe great economic advantage, because it reduces transaction costs for the private sector,’ Frans Baan, head of the European Union delegation in Tanzania, told a news conference.

The member countries have a population of about 90 million. They hope to form a common market by the end of 2007 and have plans for a common president and parliament by 2010.

Baan said one challenge in getting a single currency lies in having a common central bank, and explaining to the countries’ citizens what it entails to change currency units.

’Money is something that is very close to people’s hearts,’ he said.

Another obstacle would be how member countries manage their budget deficits, since it would affect the exchange rate. All three would have to be disciplined in managing debt levels, he said.

’If you have a big deficit, it undermines the value of the currency,’ he said.

The EAC was relaunched in 1999 after the first attempt ended acrimoniously in 1977 because of the three partners’ widely divergent political and economic thinking.
• SOURCE: Financial Times
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