East Africa Community’s target to fully implement a Monetary Union Protocol by 2024 may not be achieved after a report by the East African Legislative Assembly (Eala) noted that certain laws and institutions are yet to established.
An audit commission found that four Monetary Union Institution Bills are pending, two are yet to be assented to by heads of state and two others are being reviewed by the Sectoral Council on Legal and Judicial Affairs. The institutional framework to monitor and enforce convergence includes the establishment of the East African Monetary Institute, which was to be established by 2015 to build the region’s capacity to activate the single currency and as a precursor to the East African Central Bank. This is yet to be in place.
“The bill for the establishment of the EAC Monetary Institute has been fully assented to. Operationalisation to commence July 2021. Council yet to identify a host country,” the audit report reads.
Lack of traction
Other three pending institutions include the East African Bureau of Statistics, the East African Financial Services Commission and the East African Surveillance Compliance and Enforcement Commission, all that had an establishment timeline of 2018.
“It is embarrassing that we are in this situation. We are already in 2022 but we are not moving. There is no positive traction in the direction of achieving our pillar of single currency and the monetary union,” said Eala member George Odongo.
Eala’s Audit Commission said the delays were caused by lengthy decision making.
The Monetary Union Protocol also requires each partner state to develop a Medium-Term Convergence Programme and it was hoped that prior to entering the single currency, at least three partner states would have achieved and maintained the set performance convergence criteria for at least three consecutive years to attain and maintain macro-economic convergence. These are yet to be met.
The other key prerequisites is the full implementation of the Customs Union and Common Market Protocols to ensure sufficient trade integration and openness of labour mobility, capital mobility and exchange rate flexibility so as to respond to economic shocks.