Talks are ongoing between central banks of the East African Community (EAC) member states on the introduction of a single currency by 2012. If negotiations among the member states succeed the EAC countries would have a single currency in the next two years.

Kenya’s Minister for EAC Affairs, Amason Kingi, said central bank governors of the member states are in talks over the issue.

The single currency is expected to attract investors and reduce business transaction costs in the region.

Sceptics, however, argue 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.

In 2007, East African heads of state resolved to have a common market and a single currency by 2012, then move on to a political federation.

The common market protocol which will see free movement of people within the EAC block will become effective starting 1 July 2010 and is expected to boost trade in the region.

The EAC is the regional intergovernmental organisation of the Republics of Kenya, Uganda, the United Republic of Tanzania, Republic of Rwanda and Republic of Burundi with its headquarters in Arusha, Tanzania.