Mutebile asks EAC governors to expedite EAC monetary system

KAMPALA-The governor Bank of Uganda Mr Emmanuel Tumusiime Mutebile wants a speedy harmonization and integration of monetary, financial and payments systems in East Africa as the region prepares for a fully-fledged Monetary Union and single currency by 2024.

The East African Monetary Union (EAMU) is an important stage in the of East African Community regional integration.

The EAMU Protocol was adopted in accordance with the EAC Treaty that was signed on November 30 2013.

It lays out groundwork for a monetary union within ten years and allows EAC partner states to progressively converge their currencies into a single currency in the EAC region. 

While addressing the 23rd Ordinary Meeting of the East African Community Monetary Affairs Committee (MAC) in Kigali recently,  Mr Mutebile asked his fellow EAC central bank governors who form the East African Monetary Affairs Committee (MAC) that they should assess the realism in the timelines embedded in the EAMU road map.

“It is therefore imperative that we assess the realism in the timelines embedded in the EAMU road map and do things right. Going forward, I want to re-iterate BoU’s full support to the EAMU process,” he said. “I fully believe that there are huge pay-offs for our economies if we harmonise and integrate our monetary, financial and payments systems, even before we actualize a single currency system for the Community. May we work steadily towards the realization of the EAMU.”

Mr Mutebile reiterated that significant progress have been made towards the operationalisation of the EAMU Protocol.

“We have made strides on harmonisation of: monetary policy frameworks, exchange rate policies, rules and practices governing bank supervision, financial accounting principles, payment systems and policies and standards on statistics,” he said.

He added: “A number of national laws are also being harmonised. However, there have been delays in realising targets set out in the EAMU road map and that there are several challenges that could further impede the full implementation of EAMU protocol.”

Mr Mutebile explained to his fellow EAC governor that the medium to long-term prospects for the global economy remain very uncertain pointing out that Just last week, the IMF reduced its global growth outlook, already the lowest since the financial crisis to 3.2 per cent, and suggested that policy “missteps” on trade and Brexit could derail Page 2 of 3 a projected rebound.

Mr Mutebile said the hazy global economic outlook coupled with the continuing uncertainty in global financial markets and financial risks may lead exchange rate volatility with adverse consequences for investment and growth in our economies.

“As we deliberate, we need to be aware that these external vulnerabilities, emphasize more than ever, the need for the EAC to build resilience by strengthening policy co-ordination and intra-regional trade, which I am happy to note, is picking-up,” he said.

The 23RD MAC meeting was held against a backdrop of continued strong economic performance in most of the EAC countries, driven partly by stronger growth in public investments, rebound in agriculture sector, resilient service receipts and accommodative monetary policy.

In their final communiqué after the Kigali meeting, the leaders of EAC central banks said the economic outlook for the region remains strong, supported by continued investment in infrastructure and accommodative monetary policy.

The 23rd ordinary MAC meeting in Kigali reviewed the status of implementation of previously agreed actions towards the operationalization of the East Africa Monetary Union (EAMU) protocol, with a focus on the decisions of the 22nd Ordinary MAC meeting held in Kampala, Uganda, in August 2018.

The governors reflected on the progress in attaining the convergence criteria and highlighted the areas that are lagging behind.

The Governors noted that partner states’ Central banks have made significant strides in the harmonisation of monetary policy frameworks, exchange rate policies, rules and practices governing bank supervision, financial accounting principles, as well as payment systems.

A number of national laws are also being harmonised. In addition, significant progress has been made towards the establishment of EAMU institutions as required by the Protocol.

Notwithstanding the above, the governors 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. In this regard, the Governors pledged to collaborate with stakeholders in the EAC integration process to fast-track pending activities of the EAMU roadmap.

They reiterated the need to remain vigilant in fighting the risks arising from recent financial sector innovations especially, to ensure that central banks in the region can effectively deal with money laundering and counter financing of terrorism.

They underscored their commitment to enhance coordination of activities that will support resilience of the financial sector and to follow-up on the progress towards the realization of EAMU.

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