The ratification of the East African Community (EAC): the regional intergovernmental organization of the Republics of Kenya, Uganda, Tanzania, Rwanda and Burundi, in July 2000 calls for a close examination of the countries' economic policy decisions that affect the level and stability of prices, long-term interest rates, the fiscal position and the nominal exchange rates. The EAC countries established a Customs Union in 2005, a Common Market in 2010, and started negotiations towards a Monetary Union in 2011. This research work seeks to explore the question: "Are the five countries that comprise the EAC ready to form a Common Currency Area?" In light of the literature on common currency, this research looks at the trade relationships, economic structure, and the shocks affecting the East African Community in order to examine the feasibility of a Common Currency.

This paper examines how susceptible East African Community (EAC) economies are to asymmetric shocks, assesses the value of the exchange rate as a shock absorber for these countries, and reviews adjustment mechanisms that would help ensure a successful experience under a common currency. The report draws on analysis of recent experiences and examines likely future changes in the EAC economies.

This paper uses the business cycle synchronization criteria of the theory of optimum currency area (OCA) to examine the feasibility of the East African Community (EAC) as a monetary union. We also investigate whether the degree of business cycle synchronization has increased after the 1999 EAC Treaty. We use an unobserved component model to measure business cycle synchronization as the proportion of structural shocks that are common across different countries, and a time-varying parameter model to examine the dynamics of synchronization over time. We find that although the degree of synchronization has increased since 2000 when the EAC Treaty came into force, the proportion of shocks that is common across different countries is still small implying weak synchronization. This evidence casts doubt on the feasibility of a monetary union for the EAC as scheduled by 2012.

The East African Community (EAC) has been among the fastest growing regions in sub-Saharan Africa in the past decade or so. Nonetheless, the recent growth path will not be enough to achieve middle-income status and substantial poverty reduction by the end of the decade—the ambition of most countries in the region. This paper builds on methodologies established in the growth literature to identify a group of countries that achieved growth accelerations and sustained growth to use as benchmarks to evaluate the prospects, and potential constraints, for EAC countries to translate their recent growth upturn into sustained high growth. We find that EAC countries compare favorably to the group of sustained growth countries—macroeconomic and government stability, favorable business climate, and strong institutions—but important differences remain. EAC countries have a smaller share of exports, lower degree of financial deepening, lower levels of domestic savings, higher reliance on donor aid, and limited physical infrastructure and human capital. Policy choices to address some of these shortcomings could make a difference in whether the EAC follows the path of sustained growth or follows other countries where growth upturns later fizzled out.

We use data from online job postings listed on a job board to study how the demand for jobs linked to new technologies during the COVID-19 crisis responded to pandemic mitigation policies. We classify job postings into a standard occupation classification, using text analytics, and we group occupations according to their involvement in the production and use of digital technologies. We leverage the variation in the stringency of containment policies over time and across provinces. We find that when policies become more stringent, job postings in occupations that are related to digital infrastructure or that allow for remote work fare relatively better than postings in more traditional occupations. Job postings for positions in occupations with low risk of automation recover faster during reopenings than postings for more traditional occupations. Occupations typically populated by disadvantaged groups (e.g., women and low-wage workers) gather relatively few job postings if they are not linked to new technologies. We also find that cities with scarce pre-pandemic job postings related to digital technologies post fewer job ads overall when policies become more stringent.

Monetary Unions promote trade by lowering transaction costs and project stability in the global community. The East African Community (EAC), therefore, plans to elevate its cooperation to the next level, by establishing the East African Monetary Union (EAMU) by 2024. Nonetheless, Monetary Unions also present significant challenges and potential economic welfare losses. Hence, this paper seeks to provide valuable insights into the feasibility of the potential EAC Monetary Union by employing the Taylor Rate and Stress Tests. This method has been widely applied to, for example, the EURO area, but not yet to the EAC. The study's findings reveal notable convergence trends within the EAC throughout the past decades, thereby providing a more optimistic perspective on the viability of the EAMU compared to previous studies utilizing different approaches.

In recent years, there has been a notable increase in the efforts to establish a monetary union within the Economic Community of West African States (ECOWAS). Initially scheduled for implementing a common currency in 2003, ECOWAS had agreed to introduce a common currency called the Eco by 2020. However, due to the COVID-19 pandemic, the implementation of the Eco currency was postponed until 2027. This study adds to the existing research on the feasibility of the Eco as a common currency for ECOWAS. It adopts the framework proposed by Bayoumi and Eichengreen (1997) to operationalize the Optimal Currency Area (OCA) theory. Using OLS estimation, the study models the relationship between OCA conditions and the bilateral nominal exchange rate volatility (BNER) among West African countries from 2000 to 2021. The study's findings indicate that the Eco could be considered feasible for the countries within the West African Economic and Monetary Union (WAEMU) and Cape Verde, The Gambia, Guinea, and Sierra Leone. However, Ghana and especially Nigeria do not meet the OCA conditions to the same extent as the other countries. Consequently, an immediate monetary union encompassing all ECOWAS member countries may not be feasible. Nevertheless, the study's policy implications strongly advocate for a gradual integration approach, similar to the Economic and Monetary Union of the European Union (EMU).