The East African Community Secretariat is to conduct a validation workshop on the draft Report on the establishment of a monetary union among the East African Partner States from 18 – 20 January 2010 at the Imperial Royale Hotel, Kampala, Uganda.
The workshop is to be attended by senior officials from the Partner States’ Ministries of Finance, EAC Affairs, Planning, Trade, and Industry; Central Banks; Bureau of Statistics; Capital Markets Authorities; Association of Bankers; the academia; Parliamentarians; the Private Sector; and the Civil Society.
The Hon. Minister of Finance, Planning and Economic Development of the Republic of Uganda, Hon. Syda Bumba is expected to officially open the workshop. The Governor, Bank of Uganda, Professor Emmanuel Mutebile; the EAC Deputy Secretary General (Planning & Infrastructure), Mr. Alloyce Mutabingwa; and senior officials from the EAC Secretariat are also to attend the workshop.
On 2 June 2009, the East African Community and the European Central Bank (ECB) entered into a consultancy agreement in regard to the preparation of the Study on the establishment of East African Monetary Union (EAMU) among the Partner States of the East African Community (EAC).
In that context, the ECB did preliminary research on the study and so far submitted an interim report which has been considered and agreed upon by the EAC Secretariat and the Partner States. Based on the preliminary findings, the EAC Secretariat launched a series of consultations in the Partner States in September 2009. Consultations targeting a broad spectrum of stakeholders were held in all the five Partner States and the Consultants incorporated stakeholders’ views and have now prepared a draft Final Report of the EAC Monetary Union Study, which the Kampala workshop is expected to discuss.
The workshop will mainly brainstorm on the prerequisites for the establishment of the EAC Monetary Union; on the legal, regulatory and institutional framework; and on the preparatory work necessary for the establishment of a single currency.
The output of the Kampala workshop will enable the Consultants to finalize and submit the final report of the Study on the establishment of the Monetary Union to the EAC Secretariat by end of February 2010. The report will provide a conclusive roadmap on the establishment of a single currency in the region.
The EAC Deputy Secretary General (Planning & Infrastructure), Mr. Alloyce Mutabingwa says the Kampala workshop will also receive progress report of the International Monetary Fund (IMF) Project on Regional Financial Sector for EAC Partner States. Adding that “the scope and focus of the project is to assess regional frameworks for financial stability, analyze cross border and policy challenges. It will also evaluate the harmonization of the institutional and regulatory financial infrastructures in the region”.
Following the implementation of a fully fledged EAC Customs Union from 1st January 2010, and the signing of the East African Common Market Protocol in November 2009, the next most important stage (3rd pillar) in the East African integration process is the Monetary Union. The EAC Heads of State have directed that the East African Monetary Union be in place by 2012.
Additional Notes for Editors
Background to this Study
On 30 November 1999, the EAC Partner States signed the Treaty for the establishment of the East African Community, which entered into force on 7 July 2000. Article 5 of this Treaty states that the EAC Partner States shall undertake to establish among themselves a Customs Union, a Common Market, subsequently a Monetary Union, and ultimately a Political Federation. In addition, Article 82 of this Treaty calls on the EAC Partner States to cooperate in monetary and financial matters and maintain the convertibility of their currencies as a basis for the establishment of the Monetary Union.
At their Summit in 2004, the Heads of State of the EAC Partner States adopted a Customs Union Protocol. This Protocol entered into force on 1 January 2005 and became fully effective, after a period of progressive implementation, on 1 January 2010.
At their Summit in November 2009, the Heads of State of the EAC Partner States adopted a Common Market Protocol. This Protocol is expected to enter into force on 1 July 2009 and become fully effective, after a period of progressive implementation, by 1 January 2015.
At their Summit in 2007, the Heads of State of the EAC Partner States decided to fast track the achievement of Monetary Union by 2012. On 30 June 2008, the EAC began a procurement procedure which resulted in the conclusion of a consultancy agreement dated 2 June 2009 with the ECB concerning the preparation of the present Study on the establishment of a monetary union among the EAC Partner States.
The Study addresses four main issues:
- the prerequisites for EAMU;
- the establishment of the legal and institutional framework necessary for the implementation of EAMU;
- preparatory work for the move to EAMU, including measures to replace the national currencies with the future single currency; and
- the operational and regulatory framework for EAMU.
Where appropriate, the study describes experience in the European Union (EU), addresses the situation in the EAC and the Partner States, and then points to the way forward.