East African Community (EAC) Partner States will attain a single currency for the region by 2026 so as to ease the business and movement of persons within the region as outlined in the regional Monetary Union Protocol.
The Regional Secretary General Dr. Peter Mathuki said that the Council of Ministers is expected to make a decision soon on the location of the East African Monetary Institute, the precursor to the East African Central Bank that will issue the single currency.
“The bloc would have a single currency within the next four years,” Dr. Mathuki said, adding: “It is in line with our goal to make the region borderless so that people can move and trade freely as envisioned in the Common Market Protocol.”
There has however been some pushback by a technical working group to move the deadline to 2031.
Based on the initial schedule, the unified currency was expected to be in place by 2024.
Second East African shilling
A revived version of the currency has been proposed by the East African Community, which consists of Kenya, Tanzania, Uganda, Rwanda, Burundi, and South Sudan.
It had been proposed that the Second East African shilling would be introduced into circulation in 2012, but the target was not met. A second target date of 2015 was set, but that was not met either. The third target date was 2024 and this time again they said the currency will be ready in next four years (2026).
While not without its intra woven socio-economic issues and conflicts, East Africa is nevertheless in the forefront of the age long goal of creating a united Africa.
Its trade collaborations, cooperative economic initiatives and shared resources has made it Africa’s most neoteric regions. However, its push to unify the region’s currency is a strategy in a league of its own.
Even amongst the most progressive regions globally, this sort of idea is circumvented. Economies around the world without an intensely shared history would just rather avoid the topic, but not East Africa which is visibly keen on realizing their unification dream.
The historical background
The East African shilling was the sterling unit of account in British-controlled areas of East Africa from 1921 until 1969. It was issued by the East African Currency Board. It is also the proposed name for a common currency that the East African Community plans to introduce.
The shilling was divided into 100 cents, and twenty shillings were 1 pound.
First East African shilling
Unlike elsewhere in the possessions of the British Empire that used sterling, in British East Africa the shilling instead of the pound was the primary unit of account, with the pound being a super unit mainly used for recording very large sums of money that would be inconvenient if quoted solely in shillings.
This anomalous state of affairs arose because the first currency used by the British colonial authorities in British East Africa was the rupee, not the sterling.
The East African shilling was introduced to Kenya, Tanganyika, and Uganda in 1921, replacing the short-lived East African florin at a rate of 2 shillings to 1 florin. The florin had been introduced because of increasing silver prices after World War I. At that time, the Indian rupee was the currency of the British East African states. The rupee, being a silver coin, rose in value against sterling. When it reached the value of two shillings, the authorities decided to replace it with the florin. From the florin thence came the East African shilling.
The currency remained pegged to one shilling sterling and was subdivided into 100 cents. In 1936, Zanzibar joined the currency board, and the Zanzibari rupee was replaced at a rate of 1/50 to 1 Zanzibari rupee. It was replaced by local currencies (Kenyan shilling, Ugandan shilling, and Tanzanian shilling) following the territories' independence.
In 1951, the East African shilling replaced the Indian rupee in the Aden colony and protectorate, which became the South Arabian Federation in 1963. In 1965, the East African Currency Board was breaking up, and the South Arabian dinar replaced the shilling in the South Arabian Federation at a rate of 20/= to 1 dinar.
The shilling was also used in parts of what is now Somalia, Ethiopia, and Eritrea when they were under British control. Before 1941, these areas, then known as Italian East Africa, used the Italian East African lira.
In 1941, as a result of World War II, Britain regained control and introduced the shilling, at a rate of 1/= to 24 Lire.
The region is not just insistent on creating a unified currency, it is also pushing aggressively for the actualization of this initiative.
The East Africa Community (EAC), recently decided that a single currency can be achieved within the next four years, despite the push back by a technical working group that the deadline should be moved to 2031.
Based on the initial schedule, the unified currency was expected to be in place by 2024.
This four year push was initiated by the EAC Secretary-General Peter Mathuki, who declared that the East African Monetary Union would be achieved within the next four years.
He also noted that the Council of Ministers representing the group is expected to make a decision soon on the location of the East African Monetary Institute.