The dream of a unified East African currency is proving to be a long and winding road. More than a decade after the East African Community (EAC) set its sights on a single currency, the reality of a Monetary Union remains frustratingly out of reach. But why? Let's dive in.
The primary culprit? Delays in establishing crucial regional institutions, most notably the East African Monetary Institute (EAMI). Think of the EAMI as the foundational brick, designed to pave the way for a future regional central bank. However, the process has been bogged down by prolonged decision-making, the frustratingly slow selection of a host country, and, let's be honest, limited resources. These factors have collectively stalled progress, according to EAC Secretary General, Ms. Veronica Nduva.
But here's where it gets controversial... Meeting the agreed-upon macroeconomic convergence criteria has also proven to be a challenge. Partner states are battling volatile global conditions. These include geopolitical conflicts, climate-related shocks, and shifts in global aid and trade policies, particularly from the United States. Ms. Nduva points out that the differing economic structures and varying levels of development across the partner states are further complicating the harmonization efforts, thus delaying the Monetary Union.
The EAC Monetary Union Protocol was signed on November 30, 2013, with an initial target to launch a single currency within 10 years (by 2024). However, the timeline has been revised, pushing the target date back to 2031. This revised deadline reflects a more deliberate, systematic approach. The goal is to build robust institutions and ensure sustainable economic alignment before the actual adoption of a single currency.
Despite the delays, there's been progress on the convergence agenda. Steps have been taken to establish four anchor institutions: the East African Monetary Institute, the East African Statistics Bureau, the East African Surveillance, Compliance and Enforcement Commission, and the East African Financial Services Commission.
"The legal process for operationalizing the EAMI has been completed, and the EAMI Act came into force on July 1, 2021," Ms. Nduva stated. However, the Council of Ministers is still in the process of selecting the host Partner State. Bills establishing the remaining three institutions were passed by the East African Legislative Assembly but returned for further review after comments from partner states.
Under the revised roadmap, partner states must meet four convergence criteria by 2028 and sustain them for three consecutive years leading up to 2031. These criteria include:
- Keeping headline inflation below 8%.
- Maintaining foreign exchange reserves equivalent to at least 4.5 months of imports.
- Limiting the overall fiscal deficit to 3% of GDP (including grants).
- Keeping gross public debt below 50% of GDP in net present value terms.
And this is the part most people miss... Performance across the bloc is uneven. In 2024, five Partner States—Tanzania, Kenya, Uganda, Somalia, and Rwanda—met the inflation criterion. Kenya, Rwanda, and Tanzania achieved the reserve requirement, while Tanzania, Somalia, Uganda, Burundi, South Sudan, the Democratic Republic of Congo (DRC), and Rwanda met the debt-to-GDP threshold. Only Somalia, South Sudan, and the DRC met the fiscal deficit target.
Beyond fiscal and monetary indicators, institutional integration is also progressing at different speeds. The region has advanced in payment systems integration through a Payment Systems Masterplan adopted by central bank governors. Fiscal coordination has improved through Medium-Term Convergence Programmes, but full alignment remains incomplete.
"EAC partner states’ central banks have harmonised their monetary policy operations by adopting interest rate-based frameworks," Ms. Nduva said, noting that differences in implementation capacity still persist.
The bloc's recent expansion to include the DRC and Somalia has further complicated the process, as new members must align with existing standards while managing their own domestic economic challenges.
Commenting on the delays, Bank of Tanzania Governor Emmanuel Tutuba said all Partner States remain committed to the Monetary Union roadmap but warned that success depends on collective compliance and timely institutional set-up. He highlighted Tanzania's achievements, including maintaining inflation within the 3-5% range and sustaining stable economic growth. He also emphasized Tanzania's rapid adoption of digital payment systems, noting that greater digitization enhances transparency and tax collection across the region.
"Digital payments are secure, traceable and support stronger fiscal outcomes, not only for Tanzania but for the EAC as a whole," he said.
An EAC report shows that all partner states have now developed technical criteria to guide the transition, including commitments to low inflation, controlled deficits, sustainable public debt, and stronger foreign exchange reserves. Central banks are working towards full harmonisation of monetary and exchange rate policies by 2026, although some are still transitioning to forward-looking, interest rate-based frameworks.
The persistence of delays underscores the complexity of aligning diverse economies under a single monetary framework—an ambition that, while still alive, continues to demand patience, political will, and institutional discipline.
What do you think? Are the delays justified? What are the biggest hurdles the EAC faces in achieving monetary union? Share your thoughts in the comments below!
