Dar es Salaam. Negotiations for the creation of the Monetary Union in the East African Community are at an advanced stage and the region is determined to learn from lessons from other regions to make the envisaged arrangement a success.

But as an EAC mission, dispatched on a study tour to the embattled Eurozone two weeks ago, is about to come back, the region must do its homework before it plunges into a monetary union arrangement, analysts who spoke to BusinessWeek said.

The EAC must check the speed with which it moves towards the creation of a single currency, Hussein Kamote from the Confederation of Tanzania Industries said.

This is because economic challenges and issues to be worked upon, both by each member states and collectively as a region to make the union sustainable, need more time and resources, according to Mr Kamote the director of Policy and Advocacy at CTI.

 “It is not about stopping the negotiations. Rather we should make sure the deadline is realizable. Negotiations to create the Eurozone took quite a long time, and is still faced with challenges. We must be more careful,” said Mr Kamote who is also an Economist.

The EAC member states currently face a myriad of economic problems characterized by high inflation rates and production costs partly as a result of power problems.

While inflation, for instance, peaked in November with 29 per cent for Uganda, followed by Kenya 19.72, Tanzania 19.2, Burundi 16.4 per cent and Rwanda 7.39 per cent, the different basis for calculating these figures implies they may not be comparable.

Going by a study commissioned earlier by the European Central Bank to guide the region, each of the five countries has a raft of housekeeping tasks to perform before the monetary union springs to life. Each has to maintain an annual GDP growth of at least seven per cent, keep inflation below five per cent, and peg national budgetary deficit to five per cent of the GDP before the union is launched.

In addition, to the fact that member states budgets are heavily donor-dependent, the ongoing economic realities should prompt authorities to re-think about the EAC MU deadline.

The heads of state of EAC countries had put this year as the deadline for the creation of the MU but analysts say the deadline is unrealizable.

The EAC-MU at an advanced stage and a team of top government officials from the five countries, who have been negotiating the monetary union protocol since last year, are expected to finalise their report by end of March, just in time for the April’s extra-ordinary summit of heads of state. The next round of negotiations is scheduled for Arusha.

A lecturer from Mzumbe University Dr Elisante Ole Gabriel said the EAC members should work on the issue of consistency to avoid divisions and lack of commitments to the negotiations by member states. Already some member states are giving signals that show that they are now entirely comfortable with the entire EAC MU project.

Mr Kamote also urged the EAC to create an autonomous organ like the EU Commission to deal specifically with issues of strengthening the monetary union to relieve the EAC Secretariat whose mandate is not strong enough.

The 20 member delegation from EAC toured Europe for 12 days to learn on issues pertaining to the Eurozone. They visited the Commission and European Development Fund in Brussels; European Central Bank and the German Federal Bank in Frankfurt; Federal Ministry of Finance and Federal Ministry of Economic and Technology in Berlin, and European Investment Bank in Luxembourg.

The delegation comprised chief negotiators of a high level task force negotiating the EAC MU protocol from each country member, five officials from EAC Secretariat led by deputy the Secretary General in charge of Planning and Infrastructure.

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