The East African Monetary Union is supposed to be effective from 2012. The New Vision newspaper reported that senior officials including central bank governors, capital markets authorities, insurance and pensions regulatory agencies and national statistics officials from the East African Community (www.eac.int) partner states are set to meet in the last week of April 2011 for a third negotiation round in Tanzania.
The second meeting of the EAC High Level Task Force to negotiate the East African Monetary Union (EAMU) Protocol was in Burundi for 5 days in Feb-Mar and the first in Tanzania in January.
Four working groups – macroeconomic, statistics, financial sector and payment and settlement systems- will discuss the draft protocol.
According to reports, the second meeting considered the structure of the proposed East African Community Monetary Union Protocol and also finalised and adopted a matrix of issues to be negotiated in the different areas through the 4 working groups. It considered draft terms of reference for EAC macroeconomic convergence criteria that will be part of the monetary union protocol. It also advised that the study to review the EAC macroeconomic convergence criteria needed to be undertaken urgently.
The East African monetary union is supposed to be effective by 2012 after the EAC common market protocol that was effected on July 1, 2010 and the customs union in 2005.
EAC Deputy Secretary General (Planning and Infrastructure) Alloys Mutabingwa said in February that the EAC Secretariat was building capacity for the negotiation process and had signed a US$16 million grant agreement with the World Bank to support the EAC Financial Sector Development and Regionalization, initially for 3 years but with an extension for 6 more years. The project covers 5 areas with a base component of capacity building including: i) financial inclusion and strengthening market participants; ii) harmonize financial laws and regulations against common standards; iii) mutual recognition of supervisors; iv) integration of financial market infrastructures; and v) development of a regional bond market.