Conflict & Justice

East African Officials in Europe to Learn from Euro's Successes and Failures

These are not the best of times for the euro zone. This week, Germany – widely considered the euro zone's economic engine – lowered its growth forecast for 2012. And Greece still teeters on the edge of bankruptcy.

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Given the state of the euro, you might find it surprising that anyone would look to it as a model. But a delegation from East Africa is doing just that.

The delegation, which includes members from Kenya, Uganda, Rwanda, Burundi, and Tanzania, has been dropping in on several European institutions this week.

In the late 1990s, those five countries re-established the East African Community, or E-A-C. (A previous incarnation collapsed in the late 1970s.)

The new EAC is slowly taking steps toward regional economic integration, which includes plans — eventually — for a currency union.

Richard Othieno, who works out of the EAC's main office in Arusha, Tanzania, said a single currency would mean regional companies wouldn't have to worry about exchange rates, and that would cut down on the costs of doing business.

"We want to make business easier for the business community, and to also make life easier for East Africans," he said.

So the delegation has come to Europe to study how the world's largest currency union works.

Of course, right now, the euro zone doesn't seem like such a great model. I put it to Othieno that it's might not best time for the delegation to visit.

But he disagreed.

"This is exactly the time for them to go and study how the crisis is taking place and learn to face it head on," Othieno said. "They are not there on their holidays. They are really learning a lot."

Still, there are other currency unions closer to home. There's one in West Africa and one in Central Africa – both use the CFA franc. South Africa's rand is used in a number of neighboring countries.

In the past, Kenya, Uganda and what is now Tanzania had a common currency – the East African Shilling.

But the East African Community's economic plans are only a first step.

"It's part of a roadmap for actually creating a federal state in East Africa," according to Calestous Juma, who teaches at Harvard's Kennedy School of Government.

"It's not just the currency. It's actually integrating the economies of these countries fully, and I think the debates tend to miss that point, in that they focus on the currency, and ignore the fact that the currency is just one piece in an ecology of integrative activities."

In fact, Juma said, the EAC's proposals are ahead of European integration in some respects.

"They've actually gone farther than the European Union has gone in that they have committed themselves to creating a political federation. The EU is not there yet," Juma said, adding that the euro zone could actually learn a little bit from the East Africans.

But some in East Africa are sounding a note of caution, given the euro zone's recent hard times. In an editorial, a consultant at the Central Bank of Kenya wrote that the risks of currency union are being "underplayed."

"Imagine the chaos," he wrote, "if a Euro scenario hit the EAC."

Enos Bukuru, a deputy secretary general at the EAC, has tried to issue some assurances.

"I think we are moving at the right speed," Bukuru said last fall. "I think we are aware of what it takes to create a robust and sound monetary union."

Maybe it is the Europeans who should be listening to the East Africans, instead of the other way around.