Speaking to a section of the private sector on Monday, the IMF boss said the EAC is not yet ready for the move and needed to address key issues before they unite their currencies.
Some of the challenges, she said, include the increasing non-tariff barriers, varying economies and different tax regimes in respective countries.
“As a member of the Monetary Union of Europe, I have to tell you that it is very exciting ambitious project, but one where as Aristotle would put it; hasten slowly. Don’t rush,” Lagarde said.
She said Kenya, being a strong advocate of the regional economic integration should guide the other EAC member states in ensuring that common blunders experienced by other unions are not be repeated.
President Uhuru Kenyatta is the current chairman of the East African Community.
“Make sure you learn from our mistakes and that the East African Monetary Union can even teach the Europeans how to do it right,” Lagarde emphasised.
The Monetary Union Protocol was signed last month by regional heads of states, kicking off plans to have a common currency for the bloc within 10 years.
But the IMF chief says the countries should first come up with proper and clear convergence criteria, drawn from lessons learnt in other unions.
“There are multiple experiences, whether it is European Monetary Union, the Caribbean Unions, the West African Unions and all other unions. There are mistakes, gaps, omissions that can be learnt from,” she said.
The single currency is aimed at enhancing trade in the East African region and also strengthen the integration.
“Regional integration has opened up new markets, supported the emergence of a middle class, and enabled domestic demand to become an engine of growth. The process must now be deepened,” she however acknowledged.
Meanwhile she urged Kenya to come up proper policies that will see smooth implementation of devolution which she said stands a big challenge of Kenya’s economy.
Lagarde came into the country on Sunday 5 on a three day visit to discussing relations between Kenya and the IMF through meetings with various stakeholders.
Businessman Chris Kirubi later described Lagarde’s position on the Monetary Union as timely advice.
“This is very timely advice from the IMF chief. A Monetary Union should be the last thing that Kenya gets into. We should not allow something that could be potentially divisive come in the way of integration,” Kirubi said on phone from Dubai.