Operations of East African monetary institute to start in July

Kampala, Uganda | THE INDEPENDENT |  The East African Community Council of Ministers has set 1st July 2021 as the date for the inception of the East African Monetary Institute (EAMI).

The EAMI is a transitional mechanism to the regional Central Bank that will issue the single currency, planned to be in place by the year 2024. 

The Council at its 40th meeting further directed the EAC Secretariat to convene a meeting of the Sectorial Council of Finance and Economic Affairs to develop an institutional structure for the EAMI by 30th September 2021. 

Ministers also directed the Secretariat to initiate the process of identifying the Institute’s host Partner State, under the EAC procedures.  The country that will host the institute will have an advantage in the race to host the EA Central Bank.

However, it will also have to invest by covering office rent, office equipment, utilities and other support for the first two years.

EAMI is one of the four institutions expected to carry out much of the preparatory work for the creation of the East African Monetary Union.  The other three institutions are the: EAC Financial Services Commission; EAC Surveillance, Compliance and Enforcement Commission, and; EAC Statistics Commission. 

It is anticipated that the Monetary Union, the third pillar in the EAC Integration, will be in place in 2024 with the introduction of a common currency and the establishment of a regional central bank.

Uganda hosts the East African Development Bank, which it jointly owns with Kenya, Rwanda and Tanzania, the African Development Bank and other smaller shareholders.

There are plans to mainstream the EADB into the EAC structure, and the Council has urged the Bank’s Governing Council to consider the EAC development plans while setting the bank’s priorities.

The ministers urged partner states who are not members of the EADB to formally seek admission as members by acquiring shares.  The Council maintained the current arrangement, whereby the East African Development Bank (EADB) Governing Council approves the appointment of external auditors since this is the best practice. 

Ministers urged the EADB Governing Council to annually inform the Summit on the performance of the Bank. 

On the integration of the region into the African Continental Free Trade Agreement (AfCFTA), the Council urged the Republic of Burundi, the Republic of South Sudan and the United Republic of Tanzania to ratify the treaty by 30th June 2021. 

As of 21st January 2021, 36 African countries, including Kenya, Rwanda and Uganda, had ratified the AfCFTA Agreement. The treaty is aimed at merging African countries into one trading bloc, allowing free movement of goods and capital.

The council also directed the partner states and the Secretariat to finalize the remaining tariff offers and the EAC Schedule of Commitments on Trade in Services by 30th June 2021.  The Ministers discussed the Progress Report of the COMESA-EAC- SADC Tripartite Free Trade Area.  

They urged both South Sudan and Tanzania to sign and ratify the TFTA Agreement by 30th June 2021.  

The 40th Council also adopted the 6th EAC Development Strategy (2021/22 – 2025/26), whose overall goal Strategy is to “To Transform the East African Community into a Stable, Competitive and Sustainable Lower-middle Income Region by 2030.”

Criteria for the establishment of the Monetary Union include the attainment of macroeconomic convergence criteria, the establishment of institutions to support the Monetary Union and harmonization of policies and regulatory frameworks.

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