Uganda: BoU Governor voices strong support for East African monetary union establishment

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Preliminary consultative meetings with a broad spectrum of stakeholders on the proposed establishment of the East African Monetary Union (EAMU) ended in Kampala on Tuesday 15 September 2009. The consultations, organized by the EAC Secretariat together with the Ministry of East African Community Affairs and Bank of Uganda, engaged several stakeholders among them; senior officials from Bank of Uganda; officials from the Ministries of Finance, EAC Affairs, Planning, Capital Markets, Statistics, Trade, Industry; Justice and Attorney General’s Chambers; Office of the President; the Academia; the Media and the Civil Society.

The consultative meetings were held to solicit stakeholders’ views on the proposed East African Monetary Union and to discuss the preliminary findings of the on-going Monetary Union study, whose final report is expected in January 2010.

While launching the consultative meetings in Uganda, the Deputy Secretary General of the East African Community in charge of Planning and Infrastructure, Mr. Alloys Mutabingwa underscored the remarkable achievements in the EAC integration process which has seen among others; the establishment of the East African Community Customs Union and the ongoing finalization of the Protocol on the EAC Common Market expected to be signed in November 2009 and its operationalization in January 2010. In this context, Mr. Mutabingwa said the progress of EAC integration has therefore set the stage for the East African Monetary Union, which is the third pillar of the EAC integration process.

The Deputy Secretary General reiterated that in view of implementing the Summit decision to fast track the Monetary Union by 2012, the next two and half years were going to require alot of hard work and commitment from both the Partner States and the EAC Secretariat if the East African Monetary Union is to become a reality within the period.

The Governor, Bank of Uganda, Prof. Emmanuel Tumusiime-Mutebile voiced his strong support for the establishment of the East African Monetary Union saying “the Central Banks of the Partner States are now cooperating more than it was some 10 years ago; several milestones in the Monetary affairs are in place. On the fiscal side, there is pre-budget consultations among the Ministers of Finance; and reading of the Partner States’ budget on the same day. But there is need to fast track fiscal convergence”. All these developments are indicative that the Monetary Union can be achieved in the region, noted Prof. Tumusiime-Mutebile.

The Governor, who was meeting the EAC Deputy Secretary General, Mr. Alloyce Mutabingwa and his Team who had paid him a courtesy call, said “this is not enough, we need to take this cooperation to a higher level. Also there is the need to build a robust infrastructure to support the proposed East African Monetary Union,” asserted the Governor.

The Deputy Governor of Bank of Uganda, Mr. Patrick Byabakama Kaberenge led the BoU Technocrats during the consultative meeting that was held at the BoU new Tower in Kampala and said ?in principle, the tecnocrats in BoU welcome the EAMU and are impatiently waiting for it to take-off. Adding that ?of course it will not be easy in the intial stages and there could be mistakes, which could be corrected as we go along?.

The BoU Technocrats presented a list of issues for consideration by the Experts preparing the report on the EAMU study. The inputs from BoU technocrats included the prerequisites of the East African Monetary Union (EAMU) in regard to the macroeconomic convergence criteria, payments systems, financial integration, monetary policy transmission mechanism, financial sector regulations and the asymmetries in shocks and cycles. The issue of the roadmap for the EAMU and a comprehensive strategy for the transition are prominent on the list from the BoU Technocrats. The legal and institutional framework of EAMU, the necessary preparatory work for the establishment of the EAMU including the changeover to a single currency and the operational regulatory framework are among the issues for consideration.

During the consultative meetings with other stakeholders, there was unanimous welcome to the proposed establishment of the East African Monetary Union since it would facilitate trade by reducing transactiion costs of doing business in the Community. The stakeholders appreciated the necessary framework required for the establishment of the EAMU and noted the progress so far made in intergration of the financial sector. The stakeholders observed the challenges of the amount of work required to be accomplished given the timeframe of attaining the EAMU by 2012 and urged the consultants to prepare a more realistic timeframe for consideration by the EAC decision making organs.

The stakeholders were of the view that the current Monetary Affairs Committee could be turned into a more robust institution that could later take the role of the East African Monetary Institute (EAMI) as a precursor to the East African Central Bank (EACB). They also proposed that the EAMI and EACB should have clear mission and mandate. They concurred that for an efficient monetary union, there was need for independence from political influence, transparency and accountability.

The views collected during the stakeholders consultations in Kampala will be used to improve the final report of the EAMU study being prepared by Experts from the European Central Bank working with national experts from the EAC Central Banks.

Similar consultative meetings are to be held in the Republic of Rwanda from 17 to 18 September at the National Bank of Rwanda and at the Kigali Serena Hotel and in the Republic of Burundi from 21 to 22 September at the Source Du Nil Hotel.

Consultative meetings have already taken place in the United Republic of Tanzania from 7-8 September and in the Republic of Kenya from 10 to 11 September.

 Source: East African Community (EAC)

 ARUSHA, September 17, 2009/African Press Organization (APO)/

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