The East African Community has moved a step closer to attaining a monetary union after the Council of Ministers adopted two key Bills that if passed, will enable the partner states to establish a single currency.
The Council adopted the Draft East African Monetary Institute (EAMI) Bill, 2016 and the Bill establishing the East African Statistics Bureau.
The two draft laws are a precondition for having a single currency by 2024, and will enable the partner states to establish the East African Central Bank.
The EAMI is a transitional institution that will carry out preparatory work for the East African Monetary Union (EAMU).
The EAMI Bill will initiate the key legal instruments, identifying the host partner state, signing the host country agreements and operationalising the institute.
According to Robert Maate, head of the statistics department in the Secretariat, the Bill establishing the East African Statistics Bureau is a crucial instrument that will enable countries to harmonise their statistical data and produce and disseminate quality data in the region.
“The Bill will also enable the partner states to determine which country can host the EAC Bureau of Statistics,” said Mr Maate.
EA central bank
Partner states are expected to harmonise monetary and fiscal policies; financial, payment and settlement systems; financial accounting and reporting practices; policies and standards on statistical information; and, eventually establish an EAC Central Bank.
The EAMI is part of the key institutions that need to be put in place to facilitate the creation of a monetary union. The others are the East African Statistical Bureau, East African Financial Services and the East African Surveillance, Compliance and Enforcement Commission.
The Monetary Union Protocol was signed by the heads of state in Kampala on November 30, 2013 and outlines a 10-year roadmap towards a monetary union in 2024.
The EAMI was supposed to have been up and running by 2015 while the other institutions are supposed to be operational this year, but it has been held back by the delayed enactment of supporting legislation by the EALA.
EAMI also provides for the introduction of a single currency and creation of a single central bank.
EAC partner states have until the end of this year to establish the other institutions as part of the EAMU roadmap.
Other activities to be concluded by 2018 are co-ordination and harmonisation of fiscal policies, as well as co-ordination and harmonisation of the monetary and exchange rate policies during the transition to the monetary union.