EAC must double efforts if Monetary Union is to be achieved, officials say

The East African Community (EAC) is behind schedule as regards establishment of the East African Monetary Institute, a key body meant to carry out preparatory work for the East African Monetary Union (EAMU), officials have said. When regional leaders approved the EAMU Protocol, in 2013, it provided for gradual establishment of four institutions, including the East African Monetary Institute (EAMI), a transitional institution responsible for laying the foundation for the EAMU. “We are already lagging behind. It was supposed to be in place by 2015,” said Peter Njoroge, deputy director for economic affairs in Kenya’s Ministry of EAC Affairs. Establishing the EAMI; initiating the pertinent legal instruments, identifying the host partner state, signing host country agreements and operationalising the institute were activities for 2015. “However, even the legal framework for establishing these institutions has to be negotiated. We have to go through the normal process of negotiating how it is to be structured, and, you know, issues of negotiations take some time,” Njoroge added. “That partly explains why we took longer and why we are yet to have the institution in place”. By 2018, three other institutions: the East African Surveillance, Compliance and Enforcement Commission; the East African Statistics Bureau; and the East African Financial Services Commission, are supposed to be in place, according to the EAMU road map. Other activities to be concluded by 2018 include coordination and harmonization of fiscal policies, as well as coordination and harmonization of the monetary and exchange rate policies during the transition to the Monetary Union. Luckily, the legal framework for EAMI and the statistics bureau have been developed. Regional ministers of finance who convene under the Sectoral Council on Finance and Economic Affairs cleared the requisite Bills, he said. But there is a dilemma. The Bills were supposed to be considered by the EAC Sectoral Council on legal and judicial affairs which comprises regional Attorneys General, Solicitors General and justice ministers, but this has not happened. It is the sectoral council that must ultimately check whether Bills meet the necessary legal requirement for EAC institutions. Njoroge said: “Unfortunately, our Attorney Generals rarely meet and they have kept on postponing meetings. Two Bills were supposed to be discussed by the sectoral council in a meeting earlier scheduled last month, but unfortunately the Attorney Generals were not available. Until the sectoral council on legal and judicial affairs meets, there will be very little that will be happening about the Bills”. Innocent Safari, Permanent Secretary at Rwanda’s Ministry of Trade, Industry and East African Community Affairs, also acknowledged that the delay “is basically caused by non meeting of the sectoral council on judicial and legal affairs which is supposed to clear the legal instruments establishing EAMU.” Safari said: “It was last held, up to ministerial level, in November 2014. It has become very difficult for the attorneys general to meet and this has culminated into continuous postponement of this sectoral council.” Preparatory work unconstrained? Despite the apparent concern, however, Njoroge remains firm that preparatory work is still going on. The governors of the central banks, he assured, are following up on issues that were supposed to be implemented by the EAMI. “And, a lot of work is being done. A lot of monitoring mechanism as well as the n implementation of the convergence criteria has been developed. And it is being used in monitoring how we are doing in the implementation of the convergence criteria,” he said. Other than Burundi, it is said, Rwanda, Kenya, Uganda and Tanzania have prepared the medium term convergence programme and ministers of finance approved. The approved plans provide a trajectory on how the bloc moves from 2016 to 2021. The EAMU Protocol lays groundwork for a monetary union within 10 years and allows Partner States to progressively converge their currencies into a single currency. In the run-up to achieving a single currency, Partner States aim to harmonize monetary and fiscal policies; harmonize financial, payment and settlement systems; harmonize financial accounting and reporting practices; harmonize policies and standards on statistical information; and, eventually establish an EAC Central Bank. Whenever EAC finance ministers convene, Njoroge said, they also review progress in implementation of EAMU. The Monetary Union which comprises three sectors – financial; trade; along with investment promotion and private sector development – aims to promote and maintain monetary and financial stability. This is also aimed at facilitating economic integration to attain sustainable growth and development of the region. editorial@newtimes.co.rw

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EAC must double efforts if Monetary Union is to be achieved, officials say