It is der rigueur in the field of regional integration that a functioning common market is necessary before a monetary union.
This is echoed in Article 5(1)(a) of the protocol establishing the East African Community Monetary Union (Eamu), which dictates that there must be seamless movement of people, goods and services within the East African Community partner states.
This assumption feeds on the fact that it is more pragmatic to realise the benefits of a monetary union where there is free movement of goods, labour and capital.
Simply put, money moves where goods, services and people can also move.
But with a lukewarm common market, the EAC is creating a monetary union that will, among other things, have a single currency for Kenya, Uganda, Tanzania, Rwanda, Burundi and South Sudan.
A monetary union, strictly defined, means the use of a common currency by a group of countries. It entails the abandonment of national currencies and fiscal policies for a supranational shared currency.
