East African central banks have cast a shadow of doubt over the proposed implementation of a single currency regime by the year 2024, citing delays by member countries in realising targets set out in the Monetary Union roadmap.
The single currency regime is expected to eliminate transaction costs of exchanging currencies and remove exchange rate volatility in cross-border trading activities.
The banking regulators, through the East African Community Monetary Affairs Committee (MAC), noted that while significant progress has been made towards the realisation of a monetary union there are several challenges which could still impede the timely implementation of its protocol.
In a virtual meeting held on March 4, the Committee, chaired by Kenyan Central Bank governor Patrick Njoroge, singled out the cross-border payment systems, arguing that there is still more progress which needs to be done on this front.
“The Committee noted that there have been delays in realising targets set out in the EAMU roadmap and that there are several challenges that could further impede the timely implementation of EAMU protocol,” according to a communique released on Monday.
“Therefore, the Committee pledged to work with the EAC Secretariat and other stakeholders in the EAC integration process to fast-track pending activities of the EAMU roadmap.”
The committee said that Partner States’ Central Banks have made significant strides towards implementation of the Monetary Union, including the creation of key institutions of the of the East African Monetary Union (EAMU), and harmonisation of monetary and exchange rate policies.
Other achievements, according to the committee, include harmonisation of regulatory frameworks, implementation of measures to strengthen regional payments systems, and enhancement of cybersecurity frameworks.
In 2019, the plan to have a single East African currency in 2024 collapsed after the EAC Council of Ministers, the central decision-making and governing organ of the EAC, resolved that this deadline is not attainable, sending member countries back to the drawing board.
As a result, the member states tasked the EAC Secretariat to constitute a team of regional experts to review the roadmap and come up with new timelines.
Last year, EAC Secretariat Secretary-General Peter Mathuki told The EastAfrican that consultations on the revised timelines with the partner states are ongoing with the final proposal expected to be tabled before the Council of Ministers.
“The consultations with the partner states on the revised roadmap are ongoing in which we shall form a proposal to present before the Sectoral Council of Ministers to approve or confirm the roadmap before the end of this year (2021),” said Dr Mathuki.
The Protocol for the establishment of the EAMU was signed by the heads of state in Kampala on November 30, 2013, setting up a 10-year roadmap for attaining a single currency regime in 2024, the third pillar of regional integration after the Customs Union and the Common market.