Africa Rising: Could a shared currency in East Africa avoid the euro's woes?(Read article summary)
As Europe deals with a debt crisis exacerbated by its shared currency, the East African Community is forging ahead with discussions on a monetary union – and how to avoid Europe's mistakes.
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Hassan Mubiru should be just the sort of person to welcome plans to introduce a single currency in East Africa.
Since the East African Community (EAC) introduced a common market last year, Mr. Mubiru says greater regional integration has seen taxes slashed on the fish he exports from Uganda to its regional neighbors, business become easier, and profits rise.
But as he stands watching a half-dozen employees filleting tilapia fish in teeming Gaba Market on the shores of Lake Victoria, Mubiru says he is skeptical about talk of starting a common currency in the region.
"I can't see how it would work," Mubiru says. "Some countries are big and others are small. I don't think that they can work together, or that it would really be good for my business."
While Mubiru admits that he has never heard of the crisis a continent away that is currently engulfing the euro, his views might strike a chord with many people in Greece or Italy.
But while Mubiru may have reservations about the idea of a single currency, policymakers and economists from the EAC – a five-nation regional body which comprises Uganda, Kenya, Tanzania, Rwanda, and Burundi – are forging ahead with discussions for regional monetary union.
And they are looking at the crisis currently unfolding in the eurozone for lessons on how not to do it.
For Enos Bukuku, the EAC's deputy secretary general for planning, the region would require more integration and coordination between the member states on issues like budget control and debt management and more powers to punish member states if they fail to meet their targets.
"For the eurozone ... maybe there wasn't well coordinated fiscal policy management and enforcement. If there are benchmarks that are agreed upon, it would be expected that the community would also agree on sanctions and enforcement mechanisms," Mr. Bukuku said on the sidelines of the fifth round of negotiations on monetary union, held in the Ugandan town of Entebbe in early November.