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Spoof social media post on common currency launch spotlights high costs of regional transfers
Initially planned for launch in 2024, the East African Community's plans for a monetary union, including a single currency and common central bank, were postponed until 2033 by the regional bloc's finance ministers two years ago (AC Vol 63 No 2, Club of rivals). Though monetary union is the fourth pillar of the region's integration process, few expect the 2033 target to be met (AC Vol 60 No 13, Singing from the same spreadsheet).
Yet many local media were duped by a post on the social media site X (formerly Twitter), on 3 March purporting to be by 'the Government of East Africa', announcing the introduction of a regional common currency, known as the Sheafra, at a value of $0.76.
Hours later, the EAC secretariat posted that the bloc's 'journey to a single currency is still a work in progress'.
The Sheafra – short for Shilling of East Africa and Franc – may be phony, but the fake news story could push ministers to move faster towards economic integration.
A recent study by the World Bank found that the costs of transferring money within the eight EAC countries are among the most expensive in the world. Sending money from Tanzania to Kenya, Uganda or Rwanda involves transactions costs worth 35%, 30% and 20% respectively.
The cheapest remittance corridor in the region is Kenya-Rwanda, which costs about 7.5%, though this is almost twice as expensive as sending money from the United States to South Sudan.
The IMF, meanwhile, has cited transactions costs as one of the main barriers with the EAC's common market, and one of the strongest arguments for a currency union.
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