East African nations should be more careful as they plan a single monetary union for the region to avoid mistakes made by the European Union, the International Monetary Fund (IMF) chief said at a private sector briefing in Nairobi on Monday, attended by AFKInsider.

Christine Lagarde, IMF managing director, is on a three day official visit to Kenya to discuss the lenders partnership with the east African nation following the successful implementation of a three year program ending  this January.

The IMF boss said the East Africa Community (EAC) is not yet ready for a single currency unless it address key issues, such as increasing non-tariff barriers, varying economies and different tax regimes in respective countries.

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. The single currency is aimed at enhancing trade in the East African region and also strengthen the integration, capital fm reported.

“As a member of the Monetary Union of Europe, I have to tell you that it is very exciting and ambitious project, but one where as Aristotle would put it; hasten slowly. Don’t rush,” Lagarde said.

“Make sure you learn from our mistakes. The East African Monetary Union can even teach the European Union how to do it right,”

She said as the economically strongest member of the EAC, Kenya was in the best position to guide other member states to avoid these pitfalls, adding that the region could also borrow from the experiences of the Caribbean Unions, the West African Unions and all other unions.

Lagarde said Kenya had undertaken another critical task of implementing devolution after the peaceful presidential elections in March last year, unlike the chaos that engulfed the country after the previous election five years ago. She said devolution sounded “sexy in textbooks, but very difficult to implement.”

A decentralized devolved government system has however increased the administrative costs of running the country, especially with a huge wage bill that has pushed Kenyan treasury to introduce more taxes and borrow more to seal a 7.9 percent budget deficit.

The IMF boss said that under the ended Extended Credit Facility (ECF) support program IMF had injected $742 million into Kenya, but  in a news ECF the lender will extend over $1 billion.

“The board has already approved the amount  and mine is just to discuss other issues around the program … such as how to deal with a growing government wage bill,” she said.