East Africa Community Common currency: The Greek way?

As it seems our fate is doomed.

We will be joining the EA Monetary Union soon. However there is very little, if at all,information as to how the monetary union will perform.

My biggest worry is for the weaker economies. While competion is a healthy thing to all contestants, we must watch out for the htches which if not addressed,Tanzania will be drained dry!!

The lesson from the Greek scenario shoild be watched closely. Unfortunately no body is explaining this to the wananchi.

What will surely happen is: people will buy goods , by preferance or inducement, from the economically stronger country-Kenya that is.
Of course the business men/women will remitt the proceeds to their respective countries.

Take this over a long period of time, this will mean the SAME currency starts accumulating in one part of the monetary union.

Now this is what is happening in Greece now and before our own eyes!!!

The Euro flight from the "poorer" South European countries is now vivid and problems in Greece and Spain are all over the news.
This is what is in store for our monetary unionion.

I am not an Economist but one notable Economist, University of Maryland economics professor Theodore Kariotis points out that dropping the euro would put monetary policy muscle, control and flexibility back into the hands of the Greek government.

Tanzania Goverment watch out.


UPDATE
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‘Don’t rush’ common currency IMF boss tells East African Community BY Dinfin Mulupi | 7 January 2014 at 15:57

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International Monetary Fund (IMF) managing director Christine Lagarde has urged East African Community (EAC) member states not to rush the implementation of a single currency.
International Monetary Fund (IMF) managing director Christine Lagarde

East African countries are set to trade in a single currency by 2015 following last month’s signing of the monetary union protocol by the region’s heads of state.
Speaking to business leaders in Nairobi, Lagarde told EAC states to “hasten slowly” and draw upon the experience and lessons learned from other regions’ mistakes and omissions.
“As a member of the Monetary Union of Europe, I have to tell you that it is a very ambitious exciting project, [but] one where, as Aristotle would put it, you should hasten slowly in order to make sure that all the steps are taken and all the boxes are checked.
“Don’t rush. Make sure that you learn from our mistakes and that the East African Monetary Union can actually teach the Europeans how to do it right.”
In 2007, East African heads of state resolved to have a common market and a single currency by 2012. While the common market protocol which allows free movement of people within the EAC block came into effect in July 2010, the establishment of a monetary union has delayed and attracted criticism.
Sceptics have often argued that studies should be undertaken on the implications of transferring monetary powers to the regional level, insisting that after the implementation of the monetary union, any problems would jeopardise the entire region.
According to EAC leaders, a single currency will enhance trade among the five countries, reduce transaction costs and strengthen regional integration among Kenya, Tanzania, Uganda, Rwanda and Burundi. The East African monetary union is the third pillar of the region’s integration.

MY TAKE- I said it way back in 2010!

......tatizo la serikali yetu na wachumi wetu kila kitu wanafanya siri...........they look Greece with a side eye............trust me there a lot of lessons pale..............nakubaliana na wewe Mkuu inabidi watu wajifunze kisawa sawa hizi monetary unions.....faida na hasara zake na jinsi ya ku-regulate ikibidi...............

Ogah said:

......tatizo la serikali yetu na wachumi wetu kila kitu wanafanya siri...........they look Greece with a side eye............trust me there a lot of lessons pale..............nakubaliana na wewe Mkuu inabidi watu wajifunze kisawa sawa hizi monetary unions.....faida na hasara zake na jinsi ya ku-regulate ikibidi...............

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Ni kweli mkuu
BOT wako kimyaa utafikiri hawapo vile.
Kazi ya kitaalam kama hii wanawaachia wanasiasa, until it is too late.

Tatizo watu wengi hawajui mambo huko mawizarani yanaendeje..Mkijua yanaendeje mnaeza kufa kwa kihoro.

Abdulhalim said:

Tatizo watu wengi hawajui mambo huko mawizarani yanaendeje..Mkijua yanaendeje mnaeza kufa kwa kihoro.

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Tena huko mawizarani kuna wasomi maDr wengi na maprofesa wasio na uwezo wa kuchanganua masuala haya.

Lole Gwakisa said:

Tena huko mawizarani kuna wasomi maDr wengi na maprofesa wasio na uwezo wa kuchanganua masuala haya.

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WASOMI WAPO WENGI NA WANA UWEZO SANA NA UWA WANA RECCOMMEND VIZURI SANA SERIKALI YETU, TATIZO KUBWA LA tANZANIA NI SIASA, UWAMUZI WA KISOMI MBALI NA MAAMUZI YA KISIASA AMBAYO NDIO YANAYOTEKELEZWA MBALI,
MFANO MDOGO NI ISSUE YA RICHMOND WASOMI NA WATAALAMU WALISHAIKATAA HIYO ISSUE LAKINI WANASIAISA (EL) WAKAAMUA NA KUTEKELEZA,

At last one thinking beureucrat, a Kenyan for that matter, has got the whiffs on the perils of the EA Monetary Union.

Mr David Nalo, the PS at the Kenyan Ministry of EA Cooperation has stated categorically that the proposed EA Monetary Union is doomed from the start-given the Greek scenoario for comparison. (Guardian-Business and Foreign page iii)

How right he is!!

Recently,I have personnaly tried to ring a few editors and newsmen in Tanzania to highlight this gaping and impeding fiasco.

Many were too dim to catch my sense of urgency.

Again it has to be a Kenyan to see the wrong side of the proposed Monetary Union policy, very much thanks to our suit and tie covered beureucrats at BOT and Min of Finance as they daily troop into their posh offices atop their brand new Landcruisers!

But one wonders what the hell they actually achieve as troop back and forth their places of work if at all what is needed to be known by the masses cannot be disseminated and be known to all.

Mkulu Lole hebu break-down kidogo hii ishu kwa maslahi ya waTz wenye kutaka kujua undani wa hii ishu.

Ndugu zanguni Watanzania kuunganisha nchi ni wito wa wakubwa wa dunia hii (western).

Sababu kubwa ni soko la bidhaa zao (rejea moja ya sababu ya ukoloni kuja si soko), wanataka mkiunganisha nchi kama kampuni ilikuwa inafanya shughuli zake Tanzania mfano Barrick isiwe na kazi ya kuanza kusajiliwa tena upya itakapoamua kuchimba zahabu kule Kericho. Sasa hivi mpango ni kkunganisha kanda mbalimbali lakini mpango ni kuunganisha dunia nzima nayo ni kazi rahisi kwani kenya wako EAC lakini wanaweza kujiunga tena na ECOWAS wakiamua na bidhaa kutoka U.S.A itatua kule Accra na kufika Kenya bila vizuizi hadi Dar.

Someni Alama za nyakati, mtawalaumu akina Kikwete bule kumbe nyakati zake ndio hizi. Ninauhakika Kikwete ukimwendea kutaka maoni kwake binafsi atakuambia hii kitu ni mbaya sana.

Cental Africa nchi za Gaboni, Congo rep, Chad, C.A, wao tayari wana sarafu moja chini ya bank moja ya Central Africa Bank.

Ulishawahi kupata ajali ukiwa wewe ndiye unayeendesha gari? gari unakuwa unaliona kabisa linaenda kusiko lakini huna namna!

Mtakaa mnasema Kenya wanataka kuja kuchukua mali zetu, Bureeeeee kabisa. Kenya yamejaa makampuni ya western hivyo yakitaka kuja tanzania tena yanahitaji kusajiriwa.......to the western investors they say it is too much paper works.......they want to cut this.

Abdulhalim said:

Mkulu Lole hebu break-down kidogo hii ishu kwa maslahi ya waTz wenye kutaka kujua undani wa hii ishu.

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Thanks Mkuu Abdulahim.

The scenario is simple.

Tukiwa na various economies of varying strengths, money flow tends to go to the stronger economy. This is unfortunately a fact of life.

Mfano wa Ugiriki na Ujerumani ni kwamba, kama kuna gari mbili, Benz na gari la kigiriki ukweli utabakia kuwa hata Mgiriki mwenyewe atanunua a better product-yaani gari la Benz.

Maana yake ni kuwa unaunufausha uchumi wa Kijerumani kwa kupeleka pesa zako huko na kuwapa kazi za viwandani wajerumani.

Uchumi wa Ugiriki haukuweza kuhimili ushindani wa Uchumi wa nchi tajiri kama Ujerumani.

Kwa kuweka sarafu kuwa moja ndiyo imerahisisha kabisa kuhamisha hata ile liquidity ya uchumi wa Ugiriki maana sarafu ni moja na si rahisi kuizuia kusafiri.

Sisi hapa kwetu inaelekea tutaishia huko, kukiwa na kiwanda cha viatu cha hapa kwetu na Bata Shoes wengi watapendelea Bta Shoes kwa uimara wake-matokeo ni yale yale-kunufaisha viwanda vya nje kwa kupeleka pesa nje na kuhamisha kazi.

Sasa sielewi strategies zilizowekwa na serikali yetu.

Haitoshi kusema "Wakenya wanakuja" sisi strategies zetu zi-wapi katika kuushindanisha uchumi wetu kiviwanda?

Lole Gwakisa said:

Thanks Mkuu Abdulahim.

The scenario is simple.

Tukiwa na various economies of varying strengths, money flow tends to go to the stronger economy. This is unfortunately a fact of life.

Mfano wa Ugiriki na Ujerumani ni kwamba, kama kuna gari mbili, Benz na gari la kigiriki ukweli utabakia kuwa hata Mgiriki mwenyewe atanunua a better product-yaani gari la Benz.

Maana yake ni kuwa unaunufausha uchumi wa Kijerumani kwa kupeleka pesa zako huko na kuwapa kazi za viwandani wajerumani.

Uchumi wa Ugiriki haukuweza kuhimili ushindani wa Uchumi wa nchi tajiri kama Ujerumani.

Kwa kuweka sarafu kuwa moja ndiyo imerahisisha kabisa kuhamisha hata ile liquidity ya uchumi wa Ugiriki maana sarafu ni moja na si rahisi kuizuia kusafiri.

Sisi hapa kwetu inaelekea tutaishia huko, kukiwa na kiwanda cha viatu cha hapa kwetu na Bata Shoes wengi watapendelea Bta Shoes kwa uimara wake-matokeo ni yale yale-kunufaisha viwanda vya nje kwa kupeleka pesa nje na kuhamisha kazi.

Sasa sielewi strategies zilizowekwa na serikali yetu.

Haitoshi kusema "Wakenya wanakuja" sisi strategies zetu zi-wapi katika kuushindanisha uchumi wetu kiviwanda?

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Hii ni one sided observation.

Kuruhusu hiyo integration ni kupunguza transaction costs zinazotokana na bid-ask spread kwenye exchange rates. Maana kwa hali ya sasa inamaana ukitaka kununua bidhaa kutoka Kenya (ambapo sasa hv nyingi zinatoka huko) inamaanisha lazima ubadili pesa kwenye currency yao na hapo kuna hasara inapatikana.

Lingine pia, ni kwamba kwa wakulima mazao yao yataongezeka soko. Kumbuka mpaka sasa chakula ni ghali Kenya kuliko Tanzania kwa hiyo inamaanisha manufaa kwa wakulima. Pia tusisahau competition is all about effectiveness. Na kwa Greece tatizo halitazamiki kihivyo kama ndio chanzo; Ugiriki imeumizwa zaidi na wanasiasa.

Anfaal said:

Hii ni one sided observation. Kuruhusu hiyo integration ni kupunguza transaction costs zinazotokana na bid-ask spread kwenye exchange rates. Maana kwa hali ya sasa inamaana ukitaka kununua bidhaa kutoka Kenya (ambapo sasa hv nyingi zinatoka huko) inamaanisha lazima ubadili pesa kwenye currency yao na hapo kuna hasara inapatikana. Lingine pia, ni kwamba kwa wakulima mazao yao yataongezeka soko. Kumbuka mpaka sasa chakula ni ghali Kenya kuliko Tanzania kwa hiyo inamaanisha manufaa kwa wakulima. Pia tusisahau competition is all about effectiveness. Na kwa Greece tatizo halitazamiki kihivyo kama ndio chanzo; Ugiriki imeumizwa zaidi na wanasiasa.

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Mkuu unajua fika kuwa bado hujalielewa fika tatizo la Ugiriki na jinsi litakavyo onekana kwa chumi ndogo ndogo kama za Tanzania.

Seems hata wewe uliyeanzisha hii topic huelewi unachoongea,na sina uhakika kama unaelewa why Greek crisis happened?

Common currency or euro is not what caused Greek crisis (lots of material on the net, if you re interested go educate yourself) na strong/weak currency doesnt mean strong or weak economy, that's why chinese/japanese are dying to have weak currency na ndio problem yao kubwa na Washington,TZ kuwa na weak currency is not a bad thing at all especially kama wewe ni exporter...

Nafikiri common currency is a big advantage na kuna sababu nyingi sana to support that.

Koba said:

seems hata wewe uliyeanzisha hii topic huelewi unachoongea,na sina uhakika kama unaelewa why Greek crisis happened?

Common currency or euro is not what caused Greek crisis(lots of material on the net,if you re interested go educate yourself) na strong/weak currency doesnt mean strong or weak economy

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Sawa kabisa Mkuu Koba

By the look of things you have not in the least enlightened us on this issue.

My take is, a common currency is a vehicle for capital flight as I have exemplified.

I have also quoted a learned Proffesor of Economics in my first post. As it seems you are confused by financial terminologies.

I have not argued the case for a weak or strong currency, it is a weak or strong economy my dear vis a vis a common currency.Thus your agument on the Chinese currency does not hold substance, because the Chinese economy is undoubtly strong.

Give us the relevant quotes from the net for all to pore

Lole Gwakisa said:

Sawa kabisa Mkuu Koba

By the look of things you have not in the least enlightened us on this issue.

My take is, a common currency is a vehicle for capital flight as I have exemplified.

I have also quoted a learned Proffesor of Economics in my first post. As it seems you are confused by financial terminologies.

I have not argued the case for a weak or strong currency, it is a weak or strong economy my dear vis a vis a common currency. Thus your agument on the Chinese currency does not hold substance, because the Chinese economy is undoubtly strong.

Give us the relevant quotes from the net for all to pore

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Gwakisa, mbona unastick kwenye capital flight tu unasahau faida nyingine?

Hivi unajua bidhaa nyingi zinazouzwa Tanzania zinatoka Kenya na bei ya bidhaa hiyo inaongezwa na bid-ask spread? Kuna wakati unakuta spread ni Tsh4 unategemea nini hapo? Yaani almost 20% ya bid price ni spread.

Ukweli kuna faida zipo nyingi tu ukizingatia na sisi tuna rasilimali basi hiyo capital flight itakuja kwetu.

Lole Gwakisa said:

Mkuu unajua fika kuwa bado hujalielewa fika tatizo la Ugiriki na jinsi litakavyo onekana kwa chumi ndogo ndogo kama za Tanzania.

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Mh tatizo la Ugiriki sio currency ni mchanganyiko wa mambo mengi hasa kubadilisha serikali na sera mbalimbali za serikali zinazokuwepo madarakani.

Ndoto za mchana mbaya sana. Walianza na UAPTA wakasema tushirikiane tena nchi zote za kusini na Afrika mashariki sijui ilikwishaje, wakaja na nahau ingine etc etc. first of all hata hao wanaotumia pesa chini ya himaya iliyokuwa ya Ufaransa hadi leo wanasuasua sijui wanafikiri kuna walio lala bado. kukurupuka na kufikiria matumbo yao ndio kisa cha mizozo juu ya mizozo.

Kama wameshindwa kudhibiti matumizi ya serikali budgetary kwa miongo kadhaa wataweza kweli kuthibiti new currency? They better ask Greece, spain and coming up Portugal and then Italy if that works. Germany who are carrying the burden are about to ditch Angela Merkel.

Anfaal said:

Mh tatizo la Ugiriki sio currency ni mchanganyiko wa mambo mengi hasa kubadilisha serikali na sera mbalimbali za serikali zinazokuwepo madarakani.

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Mkuu Anfaal, its interesting, very interesting
Lakini tatizo la Ugiriki ndo hilo hilo linaloinyemelea Spain na Portugal.
Nchi hizi za kusini mwa Uropa ndo masikini wanaoumizwa zaidi na capital flight.
Waingereza wajanja wamekataa kabisa habari ya Euro

Naomba kujua kama kuna hizo sarafu na lini zitaanza tumika EAC?

thetiptopsage said:

Naomba kujua kama kuna hizo sarafu na lini zitaanza tumika EAC?

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Bado hazipo lakini zinakuja.
Ni hatua kwa hatua.
Kuna chapisho hili, lipitie utajifunza mengi pia ,kama EAC pekee anza page 90 kuendelea.
http://www.kituochakatiba.org/index2.php?option=com_docman&task=doc_view&gid=1208&Itemid=27

ukurasa wa 91 unakutana na habari hii:-

Mchakato wa kuungana ulipitia hatua kadha. Itifaki kwa ajili ya Kuanzishwa Umoja wa Forodha ilitiwa saini na Wakuu wa Nchi
wa nchi tatu tarehe 2 Machi 2004. Rwanda na Burundi zilijiunga na Umoja wa Forodha mwaka 2008 na kuanza kuzitumia hati zake rasmi mwaka 2009. Itifaki ya kuanzisha Soko la Pamoja ilitiwa saini tarehe 20 Novemba 2009 na ungelianza kutumika mwezi Julai 2010, ijapokuwa bado kuna masuala yasiyokamilka kuhusu umiliki wa ardhi na usimamizi, viwango vya namna moja vya ushuru wa nje, nyaraka za kusafiria na ulinzi wa ajira za nyumbani. Sarafu ya namna moja inatarajiwa kuanza mwaka 2015 na mazungumzo kuhusu hilo yanaendelea &#8211; ili kuelekea kwenye muungano wa kifedha.​