The Role of Single currency for Countries Economic Development: a Case Study of the East African Community

Ever since the re-introduction of the Eastern Africa Community (EAC), there has been a clamor for the introduction of a single currency. This is because the effect of multiple currencies in cross-border transaction has led to the increase of the value of goods and services. Just like some countries within the European Union have some. In as much as it may be the ideal, there is a need to make a critical feasibility study so as to determine the role of single currency to drive economic development of EAC. Single currency will serve as means of payment for cross border trade and payments, familiarize the public with the benefits of monetary integration, and would encourage coordination of EAC monetary policies. The study was centered around one research question; what is the role of single currency for economic development in EAC? The study was based in Arusha city the headquarter of EAC. The study revealed that majority of respondents have high knowledge of the factors that encourage the EAC member countries to seek for the adoption for single currency for economic development These factors include and not exhaustive: enhancing currency stability, reduction of financial risks, reduction of transaction cost, reduction of exchange rate fluctuation, enhancing price transparency and reduction of inflation that impact on trade within the region. The study shows that for the effective integration to take place: there is a need to explore several monetary union models, make a design of the integration process, and put into place a mechanism of implementing the monetary integration in a gradual manner.