Wednesday, 16 February 2011 by Linda Larbie
The East African Community and the World Bank today signed a grant agreement worth USD 16 million to support a project that will transform the EAC's financial services sector.
The agreement to fund the EAC Financial Sector Development & Regionalization Project was initialed by Secretary General Amb. Juma Mwapachu on behalf of the EAC and Country Director for Tanzania, Uganda and Burundi Mr. John Murray McIntire, on behalf of the World Bank.
Present at the signing ceremony were the EAC Deputy Secretary General in charge of Planning and Infrastructure, Mr. Alloys Mutabingwa, the Counsel to the Community, Hon. Wilbert Kaahwa, and the Director for Planning, Mr. Tharcisse Kadede.
The Project to be implemented in two phases over a nine year period will support EAC efforts towards building a single financial services market for the region. The $16 million grant which will cater for the first phase of the project (EAC- FSDRP I) was approved by the World Bank Board on 31 January this year.
According to the EAC Deputy Secretary General in charge of Planning and Infrastructure, Mr. Alloys Mutabingwa, the harmonization of the financial services sector will play a key role in unlocking some of the benefits of the Common Market by removing barriers to the free movement of capital across the EAC region, as provided for by the Common Market Protocol.
The project has six components, namely; Financial Inclusion and Strengthening Market Participants; Harmonization of Financial Laws and Regulations; Mutual Recognition of Supervisory Agencies; Integration of Financial Market Infrastructure; Development of a Regional Bond Market; and Capacity Building. Phase 1 of the project commences this year and will end in the first quarter of 2014.
World Bank representative Mr McIntire commended EAC for what he described as the “excellent work” it is doing, while EAC Secretary General Amb. Juma Mwapachu thanked the World Bank for “seeing the importance of this project”, and noted that a strong regional financial sector is needed to underpin an effective common market.
He said through the project ordinary East Africans stand to gain by trading on a regional stock exchange, as the FSDRP envisions a single East African Stock Exchange among other benefits. In addition, by supporting the development of the regional financial services sector the project benefits EAC's work towards the establishment of a monetary union and single currency.