EAC Monetary Union Fruits Yet To Be Seen

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  The implementation of the 4 goals of the East African treaty that established the East African community is saddening. The EAC treaty signed between Kenya, Uganda and Tanzania in 1999 called for phased change that would eventually unite the region in to one political federation.  With the signing of the customs union in 2005 that ensured regulation of trade tariffs within the 3 member state later joined by Rwanda and Burundi, replacing it with the common market protocol treaty also known as the Kampala treaty signed in 2009 and came into effect in 2010, the implementation of the 3rd goal post seems to be far from over.

The ultimate goal was to have a common political federation of the region but at this rate one is deemed to believe that would be in 20 years to come.

The implementation of the Monetary Union that was supposed to be in place by the end of 2012 is a subject that should have been introduced before passing the Kampala treaty of 2009 that established the Common market Protocol.

This is because for the effective working of one market that sees the extensive maximization of profits for the players in the field a common monetary value is deemed to be necessary.

At this rate where Uganda’s unstable and rather inflated shilling, trading with the landlocked country has been one of the Kenya’s challenges as the exchange rate. In an exclusive interview on phone with customs director, Richard Kamajugo of the Uganda Revenue Authority, Chimpreports found out that the situation on the ground for the implementation of the common market protocol is far from being a success as each country was supposed to review its export/imports rates and define a way of sharing of the collection which was addressed in the already phased out customs union.

Despite the Common Market Protocol allowing free movements of goods, people and services within East African Frontier, the assertion of people trading without paying taxes is not correct.

Kamajugo further explains that “Partner states are constantly reviewing rules and regulation to comply with Common Market Protocol but this has nothing to do with Taxes base and basis of taxation of goods save for internal taxes is already based on the customs union of 2005.”

However, the journey towards yet another step in the most successful trade zone is yet to take route. Former Chair of the summit of head of states President Mwai Kibaki while addressing EALA seating in Ugandan parliament, stressed that the region was fully committed into eliminating all the trade barriers and that includes re-introducing the East African Shilling which was phased out in 1967 after the introduction of the East African Corporation that facilitated provision of common services by establishing common state corporations which were co owned by the 3 member states.

Tanzania president Jakaya Mrisho kikwete has cautioned the EAC member states not to rush in to making haste decisions as history may repeat itself.

According to the Tanzanian president, ‘the first EAC, which collapsed in 1977 started crumbling at the monetary union stage around 1963 when each of the founding three states; Kenya, Uganda and Tanzania decided to part ways from their previous joint single EA currency to their respective individual shillings.’

According to Michael Nyerere, an Importer based in Kampala, the fact of Kenyan exporters not accepting the large Ugandan Shilling has made the importers to bring goods to Ugandan market at a rather high cost.

According to Michael, the partner states should have reviewed the currency as they lose a lot of money through foreign exchange. Issues become sensitive when monetary value gets in. If we go to the Euro Zone the decision for Britain to reject the Euro is a clear indication how sensitive money issues are. With the money issues being the subject pending to be decided on what will be the benefit of the new East African currency?

With April 2013 deadline for the conclusion of the Monetary Union Protocol already behind us, it’s time for the head of states to show a certain direction for their nations to walk the talk that is already long overdue. Its sad this formulation of the third pace in the working of the EAC has been met by shifted goal posts. If the EAMU protocol signed into law the region shall restore the currency and avoid the money change at the border and also have a common central bank that shall monitor the economic change both at individual state level and community level.

<![if !vml]><![endif]>The common currency if passed shall see the region eliminate the Uganda shillings, Kenya shillings, Tanzania shilling, Burundian francs and Rwandese franc and single it out to the proposed East African Shilling. When the common market protocol was signed and it became into law it brought along with it, an increased buying power in the 138million population, free movement of labour within the East African market without harassment by both employers and the government, academic qualification acceptance, free movement of goods at minimal taxations and marketing East Africa as an individual tourist destination. If the East African currency will come along it will foster constant prices of among other things imported goods.

According to Kamajugo, the disparity on the rate of taxation that does exist among the partner states where he said Uganda VAT stands at 18%, Kenya at 16%, Tanzania at 18%, Rwanda and Burundi 18% should be worked on before moving to the next step that is EAMU.  Despite the protocol calling for equality among the partner states, the facts on the ground is that all nations are not equal. Kenya’s economy is close to 19.5 times that of the smallest country Burundi. 3 countries are landlocked while Kenya and Tanzania have a coastline. Close to 60% of Uganda’s imports pass through Kenya and saying the countries to be equal is not true.

By the time of the interview with Karmajugo the Kenya Revenue Authority had held unpaid imports goods at the port of Mombasa. Ugandan importers later threatened to stop using the port of Mombasa to import their goods. However, I continue to criticize the lies that do exist in EAC that CMP is fully operational as Employers and the Revenue bodies continue to harass foreign businessmen. More recently, Chimp Media fired Felix Kilonzo without proper procedure and even failed to pay him a 3 Month salary amount to Ugsh1.5Million. Again the host state which is Uganda failed to act on despite having labour laws existing under the EAC CMP which came into existence in July 2011.

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