With a shared currency, entrepreneurs like this Tanzanian vendor won't have to change money when selling their products in other countries. Photo: justCRONO (flickr).

Has the eurozone crisis made shared currencies passe? East African leaders don’t think so, and they’re looking to Europe for an example of what not to do.

Economic integration isn’t a new idea for the East African Community. Its five member states&mdashUganda, Kenya, Tanzania, Rwanda, and Burundi&mdashalready have free movement of goods and labor, thanks to a customs union and, since last year, a common market (a type of trade bloc). According to EAC Deputy Secretary General Dr. Enos Bukuku, a shared currency would build on this by controlling price instability and exchange rate volatility among the states, writes In2EastAfrica. He says this would encourage businesses to invest and spur development in the region.

An EAC monetary union could face many of the same problems Europe has already experienced. Critics point out that the five EAC states’ economies differ greatly in size and scope. Kenya’s GDP is $31,408,632,915, while Burundi, with a fifth of Kenya’s population, has a GDP of $1,610,544,922, according to the World Bank. This could mirror the dynamic between powerful European states like Germany and the EU’s smaller states like Greece, as Tanzanian IMF head John Wakeman-Linn told The Financial Times. But EAC Secretary-General Dr. Sezibera doesn’t think this will be an issue. “If you look at EAC trade statistics, all the partner states have gained. I do not think Kenya will swallow up the other countries; it will only enrich the economic base of the community,” he said in an interview with The East African.

To the citizens who will be affected by these changes, the European Union’s tribulations are probably either unknown or seemingly distant, but EAC leaders are paying attention and believe that they can avoid Europe’s mistakes. At a round of negotiations in Uganda earlier this month, Bukuku said "For the eurozone ... maybe there wasn't well coordinated fiscal policy management and enforcement. If there are benchmarks that are agreed upon, it would be expected that the community would also agree on sanctions and enforcement mechanisms," reports The Christian Science Monitor. He also cited the issue of fiscal discipline and said that many of Europe’s problems are a result of the eurozone countries not having “lived up to what was in the treaty.”

Economists like the World Bank’s Paul Collier warn that a currency union could hurt East African economies, according to allAfrica.com. Others feel it’s simply inappropriate in the current economic climate; The Financial Times cites shrinking regional growth and depreciating currencies as discouraging indicators. But Wakeman-Linn disagrees, telling the newspaper that even if a common currency isn’t feasible, putting the necessary components in place could help East Africa:

“All the things that they need to do to achieve a common currency – integrate financial markets, trade policy, labour markets, capital markets, statistics databases, develop easy mechanisms for exchanging each others’ currencies – all of these things would be extremely valuable and would help develop the regional economy, and so these are things they should do.”

By revealing the cracks in the world’s financial systems, the global financial crisis has provided developing nations with a handy "What not to do" guide. EAC leaders are strong in their belief that a shared currency is possible, even if there are challenges along the way. “The monetary union is a possibility, not a dream,” Dr. Sezibera told The Financial Times. They originally hoped to implement the currency union by next year, a deadline that has proven to be overly optimistic.

With the lessons they’re learned from the euro’s failures, they hope to avoid some of the bumps along the way.

Margo Conner is a senior at Lewis & Clark College in Portland, Oregon, majoring in international affairs. Read her other contributions to Global Envision.

Within a few years, cheap sorghum-based beer might be the newest gift of the Nile to drinkers and farmers alike. Photo: Tattooed JJ (Flickr)

With barley beer priced out of reach and homebrewed banana beer sending people to the hospital, SABMiller is testing a new ingredient for its African alcohol: sorghum.

The giant global beermaker and its subsidiary, Nile Breweries, see an opportunity to expand their business while potentially halving the price of mainstream beer. Thanks to their tweaked recipes and Africa's abundant natural sorghum resource, prices are already falling fast.

A CNN Money article explains that the average American consumes 77 liters of beer annually. In Africa, not including South Africa, the average person only consumes about 7 liters. Because of this, SABMiller sees cheap sorghum beer as an opportunity to "crack a virgin market." Although sorghum is usually used for syrup and cattle feed in countries like Uganda, Tanzania and Zambia, SABMiller's Nile Breweries developed a beer recipe in 2002. CNN explains that by building high-tech microbreweries and micro supply chains sourcing local ingredients, SABMiller stabilizes the price of beer by reducing dependence on international imports, creating a more self-sustained and cheaper market for Africa. The new product is priced 20 percent less than imported barley beer.

This inexpensive yet high-quality beer is becoming popular very fast—nearly 35 percent of all beer in Uganda is now Nile's Eagle sorghum beer, which CNN reported is also sold in Tanzania, Zambia, Zimbabwe and Swaziland. In 2008, Heineken and Diageo followed suit with a sorghum recipe for Ghana, Sierra Leone and Cameroon. Multinationals are racing into an untouched market.

Not only does the recreated sorghum recipe help boost profit for major beer companies, it sustains Africa's economy. According to a study by French business school INSEAD, Nile Breweries added about $92 million to the Ugandan economy and supported roughly 44,000 Ugandans through agricultural, manufacturing, retailing or distribution jobs in 2007. SABMiller is sending a share of this revenue to subsistence farmers at the bottom of its value chain.

"Our affordability model is attractive because it focuses on local crops and creates additional income for farmers and a new profit pool for us without cannibalizing our core product," says Andy Wales, head of Sustainable Development at SABMiller.

As CNN explains, SABMiller's idea of using local ingredients to tap new markets follows that of Coke and Danone. Africa will contain seven of the world's 10 fastest-growing economies by 2015, CNN says, and roughly 200 million Africans will enter the consumer goods market by 2016. Multinationals, such as Coke, Danone and now SABMiller, see vast opportunities in the very near future.

Not everyone thinks SABMiller's tactics will make a mark in Africa's economy. "Africa is still mom-and-pop," said Don Elefson, a fund manager for the Harding Loevner Frontier Emerging Markets Fund, explaining that multinationals will still remain "on the sidelines." But with SABMiller's next steps of using cassava-based beer in Mozambique and Southern Sudan, seeding a Tanzanian barley industry and creating better processors to preserve products while distributing, the company may be on a fast track to meet its long-term goal of halving the price of beer in Africa and tapping a huge new market.