The EA monetary union is no longer a dream, but a great possibility

Sunday June 5 2011


Barely two months into his tenure as EAC Secretary General, Dr Sezibera has his tray full. Dr Sezibera will oversee the next facets of integration — the Monetary Union and the ultimate Political Federation. He spoke to The EastAfrican’s BERNA NAMATA on his vision, challenges and opportunities in the EAC integration process.

You have taken over at a critical time of regional integration. The region has just started implementing a Common Market, and it is now working towards a Monetary Union, what are your priorities?

There are four critical areas that need a lot of attention. We need to make sure that we have a good and functional customs territory.

Secondly, we need to make sure that the Common Market benefits are felt by the people of East Africa. It has to be not only a market for goods but also a market in which the people of East Africa feel part of in terms of ease of movement, ability to transact business etc.

The third area is the Monetary Union. Negotiations have just begun – it is a complicated and detailed process. It will take a lot of effort and goodwill from the partner states to make sure that we have Monetary Union.

And of course I will continue the work and discussion on the political federation. But the regional integration needs to be as the treaty says: People-centred and market-driven. This means it has to be a community of the people. The challenge is to make sure that this community is owned by the people and becomes extremely relevant to the people. I think it is possible to do this.
Do you think the current conditions in the region are favourable for EAC to move to the next level of integration (Monetary Union and Political Federation)?

Negotiations for the monetary union have begun and the economies of EAC are relatively close enough although there are disparities. The monetary union is a possibility, not a dream. On the political federation, the people and EAC heads of state have stated their stand. What remains is to agree on a good mechanism that deals with issues of concern to different populations within the community and agree on a timeline based on the consolidation of what has already happened that is Customs Union, Common Market and a good Monetary Union.

If we can consolidate what has already happened and conclude and implement the monetary union and the same time address the concerns of some people in the community about the political federation then the region will be on track to achieve its treaty objectives.
What do you envisage as the key challenges you have to address?

The biggest challenge in the integration process is making sure that all the partner states and EAC organs take up this project as their own.
For instance, if you have non-tariff barriers in our partner states then the EAC is not satisfactory to the business community. Non-tariff barriers raise the cost of doing business and the cost is passed on to the consumer, so you end up with a cascading effect in which the EAC members do not feel fully involved.

The second challenge is that this is a very ambitious integration agenda; it is unique in the world in the sense that the heads of state and the people of EAC have agreed that they want a political federation.

The challenge is to make sure that in the design of the federation, the concerns and strengths of the different people are taken into account and handled correctly.

Talk of setting up the Monetary Union has emerged as a hot-potato in the economic and political circles. Why?

A monetary union at a time of economic and fiscal uncertainty presents its own challenges. The partner states have to agree and harmonise their fiscal and monetary policy, that is, deal with issues of deficit so that they can be comfortable enough to have a good monetary union. Here, there are a number of challenges but I think if the partner states keep the momentum and the commitment the challenges are surmountable.
One of the issues that continues to haunt regional integration is economic imbalance between the member states. For instance some critics have said Kenya, the region’s biggest economy, is likely to “swallow up” the rest of the region. What is your view?

Evidence points to the fact that many of the fears that people have about regional integration, although legitimate end up not being entirely correct. For instance, in the Comesa free trade area, people were scared about Egypt dominating the rest of the countries and loss of revenue but the Rwandan experience is that the more you open up to trade and the better your economy becomes, the more competitive it becomes and the more revenue you collect. This is also true for the EAC.

If you look at EAC trade statistics, all the partner states have gained. I do not think Kenya will swallow up the other countries; it will only enrich the economic base of the community. In any case, philosophically you cannot say X will swallow me when you have already agreed on a political federation.

How then does the region address those emerging fears?

There are interim measures which must be taken for countries to feel comfortable so that the cost of integration will not be totally destructive to them. That is why within the Customs Union every country has a sensitive list of goods.

There are mechanisms that have been designed including such lists, compensation funds to make sure that the pains of integration are not frontloaded on to the people of a particular country. But, in the long run, opening up is much better for our countries.