East Africa: EAC Working on Monetary Union Protocol

Kaburu Mugambi| 15 July 2010|The Nation (Nairobi) |

After embracing a common market, East Africa now seeks to establish a common currency, says Kenya's central bank governor, Professor Njuguna Ndung'u.

Nairobi — As East Africans embrace the coming to effect of the common market protocol, another objective by the EAC members states set to be established by 2012 is in the works.

Already, the five central banks in the region are working on a protocol that will establish a monetary union with a single currency.

“As we did with the EAC common market, we have to come up with an EAC monetary union protocol that we will negotiate and agree on,” Prof Ndung’u, Central Bank of Kenya governor, told reporters in Nairobi on Wednesday after opening the Association of African Central Banks-Eastern Africa sub-region meeting.

During the Sixth Extraordinary Summit of EAC heads of state held in Arusha, Tanzania in August 2007, member countries were directed to among others things, move expeditiously towards establishing a monetary union by 2012.

The Abuja Treaty envisaged integration of the African continent through strengthening of the sub-regional groupings and harmonisation of national policies for eventual evolvement of a monetary union on the continent.

Towards this, an assembly of central bank governors in the continent has been implementing the African Monetary Cooperation Programme, since it was adopted on September 2002 in Algiers.

The objective of this programme is to put in place a common single currency and central bank at continental level by 2021.

Prof Ndung’u said the Eastern Africa sub-region had made commendable progress in implementing the African Monetary Cooperation Programme.

“Most of our active members have been meeting a number of macro-economic convergence targets, as we continue harmonisation and coordination of macro-economic and monetary policies,” he said.

The governor said the sub-region recently embarked on Stage III of the programme, whose successful implementation and assessment of macroeconomic perform would form basis for the establishment of a continent wide common central bank.