MOTION ON USE OF LOCAL CURRENCIES IN EA HITS WALL AT EALA

BY GRACE MACHA IN ARUSHA

 A Motion recommending full use of local currencies in all transactions in intra-East African trade hit a brick wall last week.

Members of the East African Legislative Assembly (EALA) put on hold the recommendation on  technicalities and also to pave the  way for more consultations.

Proponents had argued that use of the currencies of the  East African Community (EAC) partner states would boost the participation of the local communities in regional trade.

This, they further argued, would boost the volume of trade and services and facilitate implementation of the Monetary Union.

Furthermore,  the benefits of using the local currencies of the partner states would shield the region from foreign shocks in the financial markets.

They cited the financial crisis in 2008 which followed the collapse of Lehman Brothers when there was a shortage of the US dollars.

Additionally, they further pointed out, the value of the East African currencies depreciated because of multiple transactions at the borders.

For the EAC region, the currencies proposed to run "all transactions" are Tanzania Shilling, Uganda Shilling, Kenya Shilling,Burundi Franc, Rwanda Franc, South Sudan Pound and DR Congo Franc.

However, the MPs who took to the floor said that the matter had been brought to the House in a haste, calling for more consultations.

They wanted the drafters to revisit the Motion because such a measure would need the amendment of the EAC Treaty.

Some MPs argued that the Motion was brought at a time when the EAC was in the process of having its single currency under the Monetary Union framework.

Ms Angela Kizigha, an EALA member from Tanzania said it was still very difficult to downplay the dominance of the US dollar in the global financial markets.

However, David Ole Sankok from Kenya who moved the resolution, stuck to his guns, insisting it was "just meant to promote local trade".

He added that the timeline for the EAC single currency has once again been pushed forward to 2031, meaning a further delay.

EALA Speaker Joseph Ntukarutimana said although the matter was paramount, the regional lawmakers were keen to know much about it.

He suggested that instead of focusing on the elevation of the local currencies, the Motion should be geared on fast-tracking of the single currency agenda.