Christine Lagarde thinks single currency for East Africa is a bad idea

The International Monetary Fund managing director Christine Lagarde, fears that integration of East African economies on a single currency will hurt many economies of the member states, especially Kenya.

According to her, the proposed single currency may have been built on quicksand. She, therefore, called for a pause, to lay a stronger foundation for its stability.

In a statement released today, following her visit to Uganda last week, she noted that fissures in the bloc over Economic Partnership Agreement, the single tourist visa, non-tariff barriers on movement of people, goods and capital were signs that the building blocks were not firmly in place.

“Coming from the European Union and a country that is part of the Eurozone, I would certainly stress that making haste slowly is probably the best way to go and consolidate one step at a time, to make sure that the steps you have taken are actually solid, sustainable and will take you to the next level,” Lagarde said.

She further remarked that East African Community should focus on consolidating integration gains achieved in infrastructure, the Common Market and the Customs Union integration while going slow on the monetary union and federation projects in the wake of Britain’s exit from the EU.

Betty Maina, Kenya’s Principal Secretary for East African Community Affairs, in her comment noted that Ms Lagarde’s advice was in line with the region’s aspirations.

“The pursuit of integration must take into account that countries also have different interests. This does not mean we should roll back on progress,” said Maina.

While the EAC has achieved major milestones on integration projects like the Customs Union, Common Market, the East African Legislative Assembly, EAC Court of Justice and others, differences on some issues are increasingly threatening the bloc’s future.

Kenya and Rwanda, for instance, are at loggerheads with Tanzania, Uganda and Burundi over the EPA deal with European Union. The standoff has caused the Heads of State Summit to be postponed twice, slated for early January, was postponed to late January but failed to take place. The Summit was expected to strike a deal on EPA with European Union.

In a recent development, Kenya is also accusing its neighbors of failing to support Foreign Affairs Cabinet Secretary Amina Mohamed for the African Union Commission chairmanship. Ms Mohamed was defeated by Chad’s Moussa Faki Mahamat. Uganda had since stated that it voted for Kenya’s candidate.