East African Community member states will be racing against time to operationalise a single currency regime to eliminate exchange rate risks, boost trade and investment in the region and read from the same page of financial and economic policies.
The establishment of a common currency regime constitutes the third pillar of the EAC integration, after the Customs Union and the Common Market, with political federation concluding the integration.
The protocol for the establishment of the East African Monetary Union (EAMU) was signed in November, 2013 by the EAC member states, setting up a roadmap for a Monetary Union within 10 years, implying that a Single Currency regime should be up and running by the year 2024.
EAC member country therefore has six years to implement a single currency regime and three years to comply with key macro-economic convergence criteria on inflation, fiscal deficits, forex reserves and public debt.
The EastAfrican has however learnt that while the partner states have made some significant progress in laying the ground work for the Single Currency regime, there is still more work to be done.
Community technical teams need to burn the midnight oils to realise the dream of a Monetary Union which also provides for the establishment of a single Central Bank for the region.
It has emerged that while member countries are struggling to meet the macro-economic convergence criteria, the critical pieces of legislations required to set up Monetary Union institutions are yet to be put in place.
The EastAfrican has learnt that discussions on these pieces of legislations are on-going in secretariat in Arusha, Tanzania, even as it emerged that one of the proposed institutions — The East African Monetary Institute — is two years behind schedule.
The EAMI was scheduled to be set up by 2015 according to the initial timelines.
The protocol for the establishment of the EAC Monetary Union provides for the establishment of four key institutions: The East African Financial Services Commission (EAFSC), the East African Monetary Institute (EAMI), the East African Statistics Bureau (EASB) and the East African Surveillance, Compliance and Enforcement Commission (EASCEC).
According to Kenya’s Ministry of EAC Affairs, the Bills for the establishment of these institutions have been developed and are in various stages of the EAC approval process.
“We are looking forward to the successful and timely implementation of the Monetary Union protocol so that East Africa can forge ahead economically, guided by the advantages of a single regional currency,” said Dr Susan Koech, Kenya’s Principal Secretary in the Ministry of EAC Affairs.
The EAMI Bill was passed by the East African Legislative Assembly in April 2018 and is before the respective partner states for presidential assent.
The EASB Bill being discussed by the on-going East African Legislative Assembly Session in Arusha.
The EastAfrican has learnt that the draft Policy on the EAC Financial Services as well as the East African Financial Services Commission (EAFSC) Bill were concluded in March, 2018 and both were considered by the 8th Meeting of the Sectoral Council on Finance and Economic Affairs (SCFEA) in May 2018.
The Task Force on EAMU institutions reviewed and considered the draft EAFSC Policy and Bill in June 2018.