Many countries are being integrated in a regional integration system in order to solve some issues that those countries have as common issues and search how those countries can be developed economically, politically and social. East African Community is one of the united countries that met together to form the regional integration. For achieving this action, this community wants to implement the use of the common currency (Monetary) but it is seen that there will be the change of some things in the entire of each member countries of East African community such as: the change of their monetary, security policies, the loss of their sovereignty, etc. on this paper will compare the use of the common currency in East Africa Community and sovereignty of the Rwanda countries .
East Africa Community is an intergovernmental region which is consist of the Republics of Kenya, Uganda, the United Republic of Tanzania, Republic of Rwanda and the Republic of Burundi whereby they met together so that they can construct unit, work together having the common market, having unique activities, etc so that those countries can be developed in economic, political, and social. The secretary general of EAC is RICHARD SEZIBERA. And the current chairperson of East Africa community is MWAI KIBAKI. This community has been founded in 1967.
This is the arrangement unification of difference countries whose aim is the reduction or elimination of trade buriers of (goods, services, and factories and factors of production), the coordination of monetary and its policies. The main goal of economic integration is to reduce the costs for both consumers and producers as well as to increase the trade between those countries which participated in that agreement.
These are some steps that the intergovernmental can pass through in order to achieve to the monetary union:
Preferential trade union: The preferential trade area is also called a (preferential trade agreement). It’s an intergovernmental agreement which gives the preferential access the certain products for the countries which are the members of a given community with the aim of reducing or eliminating the tariffs not removing them completely. And this is the first step of economic integration and by setting up the tariffs of the non-member countries around the world this step is considered as the first step of economic integration.
Free trade union: this is when a group of countries combine together and try to invoke and control the prices of their products in form of tariffs, taxes, quotas between themselves this is the second step of economic integration.
Customs union: this is when the unified countries involves the trading products between by removing the customs duties and tariffs by making the application of the common trade policies And making the application of common external tariffs this step is considered as the third step of economic integration .
Common market: this when the unified countries are free to move, buying the products from one country to another without paying any taxes and this is achieved in East Africa community because they made the common market (COMESA) means common market for East and south Africa and it is doing great this step is considered as the fourth step of economic integration.
Economic union: this is the agreement between two or more countries that allows the free movement of capital, labors, products and services and involves the unification and the agreement of the actions. By meeting together they do actions for the development like constructing the roads, hospitals, water, electricity, telecom and cybercom, but not necessarily local priorities.) Common markets, schools, etc this is considered as the fifth step of economic integration.
The East Africa community was first formed in 1967, by Tanzania, Uganda, and Kenya. It collapsed in 1977 because of the political differences. Full East African community efforts began on March 14, 1996 when the Secretariat of the Permanent Tripartite Commission was launched at the head office of the East African community in Arusha, Tanzania. During a one-day summit in Arusha, Tanzania on 22 January 1999, the Heads of State of Tanzania, Kenya and Uganda decided to sign the Treaty for re-establishing the East African Community (EAC) by the end of July 1999. The community was to take over from the Permanent commission of EAC.
In addition to a decision to re-establish the East African Community by the end of 1999, other issues raised at the EAC Summit of January 1999 included the signing of a Memorandum of Understanding on Foreign Policy Co-ordination; Zero tariff rates to be adopted by 1 July 1999 and the implementation of COMESA's 80% tariff reduction objective at the same time; setting up of a mechanism to deal with terrorism in the region; and postponement in admitting Rwanda and Burundi to the EAC. Rwanda and Burundi joined the East Africa community on 6 July 2005.
To date, The East African Community (EAC) is the regional intergovernmental organization of the Republics of Kenya, Uganda, the United Republic of Tanzania, Republic of Rwanda and Republic of Burundi with its headquarters in Arusha, Tanzania.
The last stage is the Monetary Union. This occurs when two or more countries agree on a single currency for their daily transactions within the Common Market. Substantial ground has already been covered in harmonizing monetary and fiscal (economic) policies within EAC. Meetings of Governors of Central Banks are already taking place. Other activities include holding of pre-budget meetings, reading of the EAC budgets on the same day and harmonization of capital market development. Studies establishment of the EAC Monetary Union are continuing and preliminary reports are already in place. It is expected that the Monetary Union will be in place by 2012 .
The main merit of this of this monetary union is the protection of the environment and by protecting it, this is where the population of the integrated countries will be healthy and it prevents the war probabilities among the member states of EAC. The East African Community will create policies in order to set programs to insure that the security of the population is full.
This will reduce of unemployment among the EAC members and when businesses and firms produce more products. The needs of people increase gradually as a result, these firms and businesses are forced to hire more people and of course this will increase the availability of jobs in all members of the East Africa community because I think there will be the increase of the factories and industries there will be many jobs and therefore they will engage many labors. In addition, this will enable companies, businesses and firms to trade in international markets.
No more exchange rates between the participating countries member, this leads to great competition, lower prices, more international trade and investment because there greater price transparency.
The use of the same currency in the E.A.C region will reduce monetary union instability and it will eliminate the rate of the exchange rate and favors trade for the participated countries because that money will have to improve the credibility because it will be used in a large zone. Additionally, as the aim of the EAC, is to reduce the taxes and to set common tariffs to the members of EAC which will make easier the business transactions among the states .
The price of goods will be the same but I don’t think so if even the salaries that the workers will be earning will be the same in all the member states of EAC. Furthermore, the will be the change of the life style among the population of EAC because this is a new currency which will be introduced among the population. In addition, there will be the loss of the sovereignty among the member states of EAC because there will be some changes among the security, culture, political, and social. The election of leaders of EAC will be a big issue. As a result, this can lead to the highly undesirable insecurity because nations will lose the ability to control policy .
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